Can't a PIN be intercepted by the telecom guys, or are we assuming they won't be that sophisticated?
Sure, a pin can be intercepted. So can any other security code except single use codes delivered via a secondary communication method. This, however, defeats the purpose of an SMS wallet. If the network provider really wants to steal everyone's bitcoin, there is no way to stop them in an SMS-only wallet. They own the network, and all access points.
Oh, so you pay for both directions (incoming/receiving as well as outgoin/sending)?
Unfortunately, this is how all US carriers function. It is possible with international carriers that we can avoid being charged on incoming messages. Then again, outgoing fees are higher, and the sender will also be subject to international SMS fees by their own provider. Getting a number in each service area is the only way to avoid this inconvenience for users, but that carries much higher up front costs.
On a separate note, I've been researching M-Pesa and it looks like they charge the following fees:
~1% to withdraw money from the system (for cash, in person, at an associated location)
$0.40 per transaction paid by the sender
If this is correct, we could easily compete with them. Coinapult could be far more expensive than Bitcoin should be, but less expensive than what is currently available even in the best markets. M-Pesa is only Kenya, after all.
Oh, sure -- I forgot that with cloud / integration each transaction can get its own unique "from / reply to" number. Ok, so they need to do payload inspection instead.
They could indeed do some sort of packet inspection. Presumably, however, most of the carriers would be happy to accept our money. I think they only would shut us down if forced to by a hostile state.