Governments as monopoly suppliers, they are not worried about rivals. Governments do not see the Internet as a challenge to their existence. They are not able to choose the customers. Their only choice is to make distinction between its citizens and non-citizens. Very few enjoy being involved in a transaction with a government.
People enter to a transaction with a government because they have to.
One of the greatest problems in the government related transactions are their sheer complexity. Almost each government in average has about 50 departments and agencies. Just finding the right one for the task in hand can be very difficult. Also many of the services require the collaboration among the governmental departments and agencies, which consumes much time. Internet is changing the above two complexities of the government.