New telecommunications services: Network externalities and critical mass

David Allen

Telecommunications Policy, 1988, vol. 12, issue 3, 257-271

Abstract: Network externalities -- the requirement that there be a group of subscribers if communications are to occur -- play a central role in the demand for new networks. And as telecommunications evolve, new networks have increasingly taken attention. In an effort to describe the demand for new networks, this paper investigates the critical mass phenomena that characterize network externalities. The experience to date with the Minitel information service in France serves as an informal empirical check on conclusions. With this base, the paper then draws implications for the domain appropriate to regulation and for universal service pricing under liberalization. It concludes with a speculation about the role of mixed economy, illustrated by the construction of Japanese universal service.

Date: 1988
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