AbstractIn order to understand the behaviour of upper‐layer protocols and to design or fine tune their parameters over wireless networks, it is common to assume that the underlying channel is a flat Rayleigh fading channel. Such channels are commonly modeled as finite state Markov chains. Recently, hidden Markov models have also been employed to characterize these channels. In this paper, we study the different models that have been proposed along with the analysis of their validity. We start by presenting some preliminary concepts related to the modeling of the wireless communications channel. We then proceed to introduce finite state Markov channel models (FSMCs) along with the relations between them and the modulation schemes, error control protocols and channel coding. We propose and study the effects of taking into account the fading process in its characterization. We finish with a discussion on hidden Markov models for Rayleigh fading channel modeling. Copyright © 2004 John Wiley & Sons, Ltd.