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BEIJING (TheStreet) -- The gorilla at the top of the Chinese telecom mountain, China Mobile (CHL) - Get China Mobile Ltd. Report fears no challengers. What it should fear is the future.

The company enjoys strong support from the Chinese government, its largest stakeholder. And China Mobile's main rival, China Unicom (CHU) - Get China Unicom (Hong Kong) Ltd. Report, is only a monkey on the mountainside with 37% as many subscribers, and less than half the revenue and one-eighth the net income that China Mobile reported for the first quarter.

China Mobile is the world's most popular cellular carrier, with 787 million subscriptions as of May. Almost everyone in China old or young enough to swipe a screen carries at least one device equipped with a China Mobile SIM card.

But the gorilla may be running out of room for future growth. China's economy is cooling, and consumer prices are rising for non-discretionary items such as food. A new value-added tax on telecom services that took effect June 1 is likely to bite into telecom profits. And free, Internet-based voice and messaging services are undermining traditional telecom revenue sources.

Moreover, mobile Wifi plans offered by China Unicom and third-place carrier China Telecom (CHA) - Get China Telecom Corp. Ltd. Report are giving the country's urban consumers plenty of choices.

Everbright Securities has rated China Unicom's stock a buy, given the company's 74% year-over-year increase in first-quarter net earnings to 1.1 billion yuan. The report cited strong sales of China Unicom's broadband Internet services and expectations that the company may spin off assets as the Chinese government opens more state companies to private investment.

China Mobile is actively seeking growth. It's building a faster, 4G Wi-Fi network that will accommodate the free voice and messaging services used daily across China, such as Hong Kong-listed Tencent's (TCEHY) WeChat and QQ. The 4G network, which will cost an estimated $39 billion, will cover about 340 cities. A 5G network is being planned.

Moreover, China Mobile is cooperating with 17 wholesale Wi-Fi marketing companies, called mobile virtual network operators, such as Alibaba's( ALBIY) Ali Telecom. Alibaba is an e-commerce concern with an IPO pending in New York.

To profit from the seemingly unstoppable shift to all-Internet, all-the-time communications, China Mobile is packaging 2G, 3G and 4G Wi-Fi subscriptions with handsets. It added iPhones to bundled plans in January under a deal cut with Apple (AAPL) - Get Apple Inc. Report, whose CEO Tim Cook kowtowed in a December press release that "Apple has enormous respect for China Mobile."

Consumers have responded well to the 4G service launched in late January. China Mobile has since doubled 4G subscriptions every month, topping 8 million in May. An expected iPhone 6 rollout this year should raise subscription revenue.

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But China Unicom and China Telecom are also bundling plans with handsets, including devices made by China's discount phone maker Xiaomi. And their ties to Apple are deeper, as they have been offering iPhones to customers since 2011.

China Unicom has fewer 3G and 4G subscriptions than China Mobile does, but demand for its Wi-Fi service has been climbing faster. China Unicom said combined sales of 3G and 4G plans shot up 58% in May from April's level. The gorilla's comparable sales, meanwhile, rose just 3%.

Even the 4G-less China Telecom is showing more growth potential than China Mobile, reporting an 18% increase in 3G subscription sales in May from a month a year earlier.

This competition, which the government says will be further encouraged by the new VAT, is set against a backdrop of consumer retrenchment. As China's economy slows and prices rise, more consumers may stick with existing phones and plans rather than upgrade to a new iPhone with 4G.

Reflecting declining retail orders across China, manufacturers shipped 24% fewer mobile phones to sales outlets, including telecoms, during the first quarter than a year before, according to a Ministry of Commerce report. Nationwide smartphone shipments alone slipped about 10%, and shipments of 2G phones plunged 71%.

Yet the number of handsets shipped nationwide in the first quarter was huge -- about 100 million units, including 89 million smartphones, the ministry said. Consumers will use most of these smartphones for Internet voice and messaging services -- free services that replace what they used to buy from the gorilla.

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.