Taiwan is one of only two countries worldwide in which the penetration of mobile telephony exceeded 100% in 2002. This study identifies the drivers behind the accelerated growth of mobile telephony in Taiwan, in terms of the diffusion model and forces driving such diffusion. Various diffusion models are compared to identify the optimum one. Drivers for the diffusion rate of the model are then estimated. Empirical results, based on 1988–2007 data, indicate that the Logistic model performs the best in terms of the minimum root mean square error. Network externalities explain the dynamics and superiority of the Logistic model. Deregulation leads to market competition, making it the primary driver for diffusion. This empirical study also demonstrates that deregulation promotes the diffusion to the takeoff point, which is vital for success. Overall, network externalities are in conjunction with the deregulation to promote the rapid diffusion in Taiwan.