Access to wireless data is exploding in China. The number of mobile-phone subscribers is forecast to grow from 44 million people at the end of 1999 to between 150 million and 250 million by 2005 (Exhibit 1), making the country the world’s largest wireless market as reckoned by numbers of subscribers, though not necessarily by revenue. In turn, this development could mean that in five years, China will boast some 40 million to 50 million subscribers for wireless Internet service. By 2003, revenue from access fees paid by consumers to telecom companies for wireless data could reach $4 billion (Exhibit 2).

Two main factors are driving the growth of the wireless Internet in China: a mobile infrastructure that is more developed than its fixed-line counterpart and the greater affordability of mobile telephones as compared with PCs. Interviews with Chinese consumers suggest the market’s potential: in a McKinsey survey conducted with 100 randomly chosen mobile-phone users in Beijing, Guangzhou, and Shanghai, 68 percent expressed interest in wireless data services.

Today’s Chinese mobile networks are, on the whole, data friendly. China Mobile, which is the country’s dominant carrier, and China Unicom are already undertaking trials for GPRS (General Packet Radio Service)—an...