It turns out that it is a technical limitation imposed by the GSM standard. As always Wikipedia has a nice article on the topic.
Transmission of short messages between the SMSC and the handset is done using the Mobile Application Part (MAP) of the SS7 protocol. Messages are sent with the MAP mo- and mt-ForwardSM operations, whose payload length is limited by the constraints of the signalling protocol to precisely 140 octets (140 octets = 140 * 8 bits = 1120 bits). Short messages can be encoded using a variety of alphabets: the default GSM 7-bit alphabet (shown above), the 8-bit data alphabet, and the 16-bit UTF-16/UCS-2 alphabet.[18] Depending on which alphabet the subscriber has configured in the handset, this leads to the maximum individual Short Message sizes of 160 7-bit characters, 140 8-bit characters, or 70 16-bit characters (including spaces).
Read the whole article here.