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3G is dead. Long live 3G... but at what price?

No new services means no new revenue. It's a lesson that the mobile operators know well -- and one that this column has remarked upon before. But what does it mean for next-generation mobile data networks?

This week saw Ericsson, one of the big two mobile telecoms infrastructure players, issue a profits warning - which triggered a drop in its share price of 30 percent. We shouldn't start to panic, since Wall Street, with its mania and expectation that every quarter a company will demonstrate unfeasibly huge increases in profitability, is prone to this kind of reaction. (Who'd run a public company?)

But I digress. The Ericsson story on its own might be just a blip in the Swedish company's operations. But the unhappily merged Alcatel-Lucent has also shown poor results. And both Alcatel-Lucent and Ericsson have cited falling spending on the part of the mobile operators as a major cause of their woes.

Those operators are facing an uphill battle in the face of their feeble attempts to attract users -- personal and corporate -- onto their data networks. Now, with end-user prices falling to the point where mobile data appears to be pretty much a no-brainer, the operators will have to provide that service by lowering their cost bases even further than they already have.

They face competition not just from each other but also from users, who are starting to make demands for open source -- or at least unlocked -- phones.

Look at the Apple iPhone debacle. No sooner had the shiny new and highly profitable device hit the market than users started unlocking them so they could be used on any network.

Surely it's a user's right to choose? Not if you're an Apple customer.

In its usual proprietary and high-handed manner, Apple promptly issued a software update that didn't just re-lock the phones, it turned them into useless bricks. So much for the Cupertino company's much vaunted user-friendliness.

But it's a bellwether that strongly suggests that, for mobile operators, the business model of semi-proprietary hardware locked into a walled garden is starting to seriously fall apart at the seams. Users are increasingly saying 'no thanks'.

What this means for high speed data is that pressure on margins is likely to see fewer new services launched but much more concentration on internal cost reductions, such as using Broadcom's 3G on a chip, also launched this week.

And what about WiMax, so heavily touted by Intel and friends as the foundation for the next generation of high-speed mobile networks?

You might be taking quite a risk if you gambled on that horse, when it behooves the operators to stick to their knitting and incrementally improve existing 3G networks -- as they seem slowly but surely to be doing.

3G lives -- and probably will for quite some time. But maybe, not quite so profitably as infrastructure providers had hoped?