By Sven Grundberg STOCKHOLM--Swedish mobile network equipment giant Ericsson (ERIC) said Tuesday it is optimistic about the long-term prospects for the wireless network industry, which it says will be driven by increasingly cheaper smartphones, tablets and other data-hungry wireless devices. In its latest mobile traffic report--a survey based on traffic measurements in Ericsson's wireless networks--the company said it sees continued strong smartphone uptake globally, adding that 40% of all mobile phones sold in the first quarter this year were smartphones, compared with 30% for the full year 2011. "[Google Inc.'s (GOOG)] Android platform has definitely contributed to this development, as it has helped to bring down prices of smartphones and made these devices more widely available," said Johan Wibergh, who heads Ericsson's network business unit. As more people access the internet from mobile devices, there has also been a corresponding growth in mobile data traffic. Ericsson recorded a doubling of mobile data traffic the first quarter this year compared with the same period last year, and expects global mobile data traffic to grow 15 times by the end of 2017. "Of course this development creates a tremendous opportunity for us, as the largest provider of mobile networks," said Mr. Wibergh. To cope with the expected increase in mobile data traffic, Mr. Wibergh said carriers will need to replace older second-generation mobile infrastructure with hardware and software that is enabled for high-speed data traffic, as well as increase the overall capacity of their networks. While some observers are warning that general economic uncertainty will put a cap on carrier spending on networks, Mr. Wibergh said Ericsson isn't too concerned, given that data traffic is now translating into higher revenue for operators. "Data traffic is proving to be good business for operators, and I'm sure that operators are viewing mobile data as one of their best opportunities to improve revenue and income," Mr. Wibergh said. Some 85% of the world's population have access to less advanced second-generation networks that allow voice calls and limited data traffic, while high-capacity third-generation data networks cover less than 50% of the world's population, according to Ericsson's survey. But as smartphone adaptation grow Ericsson estimates that 85% of the world's population will have access to 3G coverage by 2017. Meanwhile, developed markets will continue to build out fourth-generation Long Term Evolution networks that allow vastly faster data traffic speed. Markets like the U.S., Japan and Korea have started building up LTE coverage, but there is still a long way to go, Ericsson said. Today about 315 million people, just 5% of the world's population, have access to 4G networks and Ericsson expects this share to reach 50% in five years. According to Ericsson's report, the total number of mobile subscriptions in the world reached 6.2 billion in the first quarter, up 12% on the year and 3% on the quarter, driven by an increasing number of subscriptions in China and India. Some 1.1 billion of mobile subscriptions in the first quarter were for mobile broadband services, which saw growth of 60% on the year in the first quarter. While smartphone uptake is high, Ericsson said there is room for growth in this segment. "Only around 10% to 15% of the worldwide installed base of subscriptions use smartphones, which means that there is considerable room for further uptake," Ericsson said. The rapid uptake of data-hungry mobile devices, combined with the ongoing migration to more advanced wireless network technologies in developing countries, means less advanced 2G subscriptions will begin to decline next year, Ericsson added. Write to Sven Grundberg at sven.grundberg@dowjones.com
