"Infinite SMS is a third party app that has been using Google technology to provide free SMS for users, while we were paying for the cost of the text messages. While Google is supportive of third party apps, we've decided we can't support this particular usage of our system at this time. SMS chat is still just an experiment in the early testing stages in Gmail Labs. We're blocking all external XMPP clients from sending SMS; we're not singling out Inner Fence."
Inner Fence is the developer of Infinite SMS.
Inner Fence was surprised that their app was too big for Google but I guess it is the free money they were getting at Google's expense. Another possibility is that Google wanted to put an stop to copy cats that will start using the same protocols to earn some money,
I really hope, SMS will leave the clutches of carriers soon and we all be able to use it like email. Thanks Inner Fence, It was good while it lasted.