E-Mail: Tanya.Sammut-Bonnici@um.edu.mt
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Chapter Introduction:
Network economics theory provides insights on the speed of adoption of M-government services. It provides a roadmap for governments to harness the complexity of launching the right services on the right platform with the relevant strategy. In this chapter we discuss the relevance of network economics and outline the diffusion and adoption dynamics of mobile services. The potential of the rapid diffusion and take-up of services is explored in the light of network externalities, self-reinforcing dynamics and critical mass. We discuss the new world of real and virtual networks, and direct and indirect network externalities, and we look at how critical mass triggers exponential adoption at crucial stages in the life cycle of mobile services.

The diffusion of M-government services is typical of virtual networks, which are software based systems that reside on real networks such as the mobile communications network (Katz, Shapiro, 1985, 1994; Arthur, 1989, 1990). The adoption of information services, such as M-government services, is fueled by two tiers: exponential take-up by consumers at the level of the mobile platform, and positive spirals of content improvement of M-government services through the dynamics of the hardware-software paradigm. The success of M-government services has become dependent on the diffusion and performance of the real network over which they are carried. Hence the dynamics of adoption of a real network needs to be understood in order to effectively promote virtual network services.

The high penetration rate of mobile telephony leads us to believe that the stages of adoption and diffusion of mobile phones have settled and that the mathematics which governs diffusion is a hygiene factor. However with every new technology that is introduced over the mobile network, the mechanism of innovation diffusion starts again, with slow initial adoption, the attainment of critical mass, followed by rapid take off. Mobile services will continue to evolve with the platforms on which they run. As the networks change and shift to superior technologies, so will the nature of their ancillary products. Their diffusion will continue to be led by the diffusion dynamics of the mobile platforms.