The European Commission has produced the first annual report on the i2010 strategy, calling for greater 'policy convergence' in the information communication technologies (ICT) sector to boost growth and jobs in Europe. The ICT sector is seen to make an important contribution to increasing growth and jobs, as called for in the renewed Lisbon strategy. Indeed, estimated ICT revenue figures for 2005 show increases of 3.6 per cent, a higher than average growth rate compared to other sectors. The sector is also considered to be the most innovative and research intensive sector in the EU, representing 25 per cent of the total research effort and 5.6 per cent of the GDP between 2000 and 2003. ICT also generated at least 45 per cent of EU productivity gains over the period 2000-2004. However, Europe still lags behind its competitors, with the US which consistently investing almost twice as much as the EU in ICT since 2000. China has become the biggest exporter of ICT goods, overtaking Japan and the EU in 2003 and the US in 2004. In addition, the contribution of ICT to productivity has decreased significantly compared to the second half of the 1990s, and is still about half that of the US. Overall, no indicator points to a change in the trend or an acceleration in ICT developments which would put the EU onto a sustainable path of growth and competitiveness. In light of this, the report reviews steps taken in the last year by the Commission, Member States and all relevant stakeholders to harness the digital economy for Europe, and identifies areas in which further efforts are needed to ensure the transition. Following the adoption of the 'i2010 strategy - a European Information Society for growth and jobs' - in June 2005, Member States introduced research and innovation priorities and referred to ICT in their National Reform Programmes (NRPs). Most references to ICT address eGovernment, broadband and digital literacy. Half of the Member States also mention ICT uptake by firms and households, implementation of the electronic communications regulatory framework and network security. While supporting the wider adoption of ICT, the report argues that Member States can make additional progress by including more forward-looking elements like digital convergence or ICT research and innovation, and making explicit links between their ICT priorities and the overall Lisbon objectives. The report also refers to the need for a coherent approach to regulating the sector at European level. The Commission has already started a process to do this with the launch in 2005 of a review of the current regulatory framework for electronic communications, including recommendations on how to address the challenges of international roaming. However, with the emergence of new devices, networks, and services, the EU will have to be ready to address new challenges, says the report. These include the provision of digital copyright protected material at European level, the deployment of digital rights management (DRM) solutions, and the need to update consumer and data protection rules and the fight against online distribution of illegal content. In the area of research and innovation, the report refers to a number of initiatives which are helping to increase coordination between Member States and Commission research and development (R&D) programmes. They include the establishment of nine European Technology Platforms relating to ICT, two of which are working to create Joint Technology Initiatives; organising consultations on ICT-related innovation systems and ways to strengthen research; and the adoption of the Competitiveness and Innovation Programme (CIP). The forthcoming adoption of the Seventh Framework Programme (FP7) will also consolidate efforts to increase coordination and investment in ICT research and innovation, the report notes. However, it is not only Member States and the Commission who should be driving the ICT sector forward. The report points to the need for businesses to re-organise their processes, match ICT investment and engage in more collaborative initiatives in order to translate their investments into efficiency gains. It highlights the business potential of SMEs, and refers to work already underway within European eBusiness Support Network for SMEs (eBSN) to improve synergies among existing e-business policy initiatives in Europe to promote competitiveness of SMEs through the use of ICT. The Commission has also created an ICT Task Force composed of business and other stakeholders to review together the competitiveness of the ICT sector.