ABSTRACT
This chapter highlights some crucial factors at the demand side of the information and communications technology (ICT) market which justify and stress the importance of government intervention in the diffusion of new communications technologies. Technology policy has traditionally focused mainly on entrepreneurial invention and innovation of new technologies, but several studies have stressed the importance of government support in the adoption and diffusion of innovations. Tremendous technical progress in ICT and a consequent increase in the capacity of telecommunications networks to transmit data and information has led to the development of a great number of new communications services. The market for communications technology exhibits dynamic or sequential externalities, which reflect an intertemporal dependence of economic actors and which are related to the timing of adoption of new technologies. Government investments in communications infrastructure has been of fundamental importance in the diffusion of communications technologies.
