The latest update of the Ericsson Mobility Report forecasts mobile video traffic growing by 60% annually, enabled by increased network speeds. Video is expected to account for around half of total global mobile network traffic. The report forecasts that there will be 4.5 billion smartphone subscriptions by the end of 2018, by which time almost all handsets in Western Europe and North America will be smartphones.

Video is the fastest growing segment of mobile traffic, although it represents a relatively small amount of total minutes of network use. Yet it currently accounts for just over 30% of mobile data traffic, according to the Ericsson analysis. That is forecast to rise to 46% by 2018, or more than that if encrypted data and file sharing are included. In contrast, the share of traffic for web browsing will fall from 14% to 10%, although the volume of data will continue to rise.

Increasing usage is driven by continual growth in the amount of video available online as well as the improved network speeds delivered by fourth generation mobile networks. Although the latest Long Term Evolution networks are only just being rolled out, currently covering around 10% of the global population, that is expected to rise to 60% coverage by population in 2018. By then, LTE will be dominant in North America, although the highest number of subscriptions will be in Asia.

“We expect LTE subscriptions to exceed 1 billion in 2017, driven by more capable devices and demand for data-intensive services such as video,” said Douglas Gilstrap, the senior vice president and head of strategy at Ericsson.

Larger device screens and higher resolutions will also drive video traffic as they will enable the delivery of high-definition and eventually even ultra-high-definition video, Ericsson suggested.

Patrik Cernwall, the head of strategic marketing and intelligence for Ericsson networks, told analysts the company had increased its forecast for smartphone subscriptions, saying they were growing faster than previously anticipated.

It took five years to reach the first billion smartphone subscribers. It is expected to take less than two years to get the next billion smartphone users.

Over the forecast period, the average smartphone subscription data usage will rise from 400 megabytes a month to over 2 gigabytes, with some heavy users requiring considerably more. Video consumption is already on average 2.6 gigabytes per subscription per month in some networks.

Consumer research conducted by Ericsson suggests that people care about network performance. It has the greatest impact on consumer loyalty to a service provider, ahead of value for money.

Some may see vendor forecasts as self-serving, since predicted demand for networks is closely correlated to availability, which in turn is dependent upon operators upgrading their infrastructure.

The picture is complicated, because consumers will also offload network access onto local WiFi networks, for reasons of cost or performance, so the mobile network is not the only determinant of usage. However, experience suggests that people will come to expect similar levels of availability and performance outside the home.

The Ericsson data is based on traffic measurements in mobile networks around the world since the early days of mobile broadband. It shows that mobile data traffic doubled during 2012 and that trend is forecast to continue, resulting in a compound annual growth rate of 50% between 2012 and 2018, resulting in 12 times the amount of mobile data traffic by the end of that period.

The Ericsson Mobility Report is published online by Ericsson and will soon be accompanied by interactive tools that will allow users to drill down into the data by market segment.