Is there early take-off phenomenon in diffusion of IP-based telecommunications services?

Abstract

Traditionally, the diffusion of telecommunications services has been considerably affected by the presence of critical mass and network externalities. and thus has shown the so-called "late take-off" phenomenon. However, as telecommunications networks evolve from circuit switching to packet switching, especially IP networks, and thus enabling diverse new services, it seems these traditional telecommunications diffusion patterns are changing. By comparing the diffusion of IP-based services with those of circuit-based services and durable goods, we have found the late take-off phenomenon is not involved in the diffusion of newly introduced IP-based services. Moreover, we concluded that the diffusion of IP-based services is much faster than that of durable goods, thus showing an "early take-off" phenomenon. Based on this empirical result, we suggest that telcos (telecommunications companies) and Internet service providers (ISPs) should pay as much attention to the growth stage as the introduction stage in their development, in order for their IP-based services to be successful in the market. (c) 2006 Elsevier Ltd. All fights reserved.