A new report on digital services in Europe ranks Ireland as ninth out of 28 countries in the European Union.
The new Digital Economy and Society index measures connectivity - how widespread, fast and affordable broadband is - internet skills, the use of online activities from news to shopping and how digital technologies like ecommerce and digital public services are developed.
Denmark tops the index with a score of 0.68, and is followed by Sweden with 0.66 and the Netherlands with a ranking of 0.63. Ireland has a score of 0.52 which means it falls into a cluster of "medium performance" countries.
Romania is at the bottom of the index with a score of 0.31.
The index shows that 75% of Europeans used the internet on a regular basis in 2014, up from 72% in 2013. This ranges from 93% in Luxembourg to 48% in Romania.
The index reveals that take-up of fast broadband has increased considerably in Ireland in the last year, with subscriptions up to 40% from 30%.
The use of internet services has also increased with 71% of those surveyed using video on demand and 63% using social networking. 62% of people in Ireland use online shopping while 60% avail of online banking.
However, the report says that more needs to be done to increase people's digital skills with only 53% of the population deemed to have sufficient digital skills to operate effectively online. This is actually down from 56% in 2012.
It also shows that around half of businesses here have trouble recruiting staff with the necessary technology skills needed for their jobs.
Ireland is ranked 18th in terms of connectivity with 96% of Irish households covered by fixed broadband. This is somewhat below the EU average. But take-up of mobile broadband at 71 out of every 100 people is above the EU average.
Ireland fares badly on value for money - prices for fixed broadband here are almost double the EU average and have become more expensive over the last year.
The report says that businesses in Ireland could better exploit the possibilities offered by electronic information sharing. It states that a "true digital economy" is one where businesses take full advantage of the possibilities and benefits offered by digital technologies and Irish businesses are not taking full advantage of these possibilities.
It also says that while active Irish eGovernment use at 56% is well above the EU average, provision of pre-filled forms in online services is relatively low at 32 out of 100.
In the area of eHealth, just 5% of Irish doctors use eprescriptions, which is much lower than the EU average of 27%.