The NASDAQ-listed Internet portal Netease.com has reported that its second-quarter wireless revenue will fall as much as 40 percent from the first quarter, to US$4 million, on weak short-message service sales early this month.

Other top portals like Sohu.com and Sina.com are expected to report similar declines.

China has 300 million cost-conscious cellphone users. An estimated 240 billion short messages were sent last year, a whopping 170 percent increase from the year before, in large part owing to the SMS rate advantage.

But a gradual decline in the cost of mobile phone calls is stealing SMS' thunder. In many parts of the country, mobile tariffs have fallen as low as 0.2 yuan (2 US cents) per minute, eliminating much of the advantage that SMS had in the past.

As a result, cellular operators are expected to try to renegotiate their revenue-sharing schemes with the websites. Currently, top cellular operator China Mobile’s agreements permit it to keep 15 percent of the revenue, leaving 85 percent to the websites.

(Xinhua News Agency July 20, 2004)