Key point is that it has to fit in 1 SMS message, that's where the whole 140 character thing comes from.

Tweets already diverge from what will fit in an SMS. For example, 140 chars of unicode won't fit.

We go by bytes, not chars.

That's incorrect, Twitter goes by characters. I actually wrote an app to exploit this loophole:

http://tweetcompressor.com/

It only has to fit in a single SMS message if the tweet is being consumed over SMS. There's no reason to do link shortening in other user interfaces.

yes but is it worth the illegibility and extra step of shortening? how many of those sms recipients make use of the link by retying it in a browser? if there is much of a use case why not have special handling for it?

I would like to know the percentage of tweets sent as SMS.

Also SMS fits 160 chars, not 140.

20 chars were reserved for twitter username

160 7-bit characters.

Twitter usernames are 15, the ": " takes another two, and three are reserved for future sigil retardation.

140 doesn't include the user name, the app name and probably some more info.

Because they retain control of the content when they use an in-house link-shortener.