A study compiled by consultancy firm Frontier Economics concludes that drastic reductions in mobile termination rates (MTRs) proposed by the European Commission (EC) would prove of little benefit to European wireless subscribers who are likely to be hit with higher retail prices as a consequence of MTR rate cuts. Commissioned by Deutsche Telekom, Orange, Telecom Italia and Vodafone, the study highlights the alleged pitfalls of European Union (EU) Media and Information Society Commissioner Viviane Reding’s recent proposal to mandate a 70% reduction in MTRs (i.e., the rates that wireless carriers charge each other to complete calls on each others’ networks) with the goal of lowering wireless calling costs for EU consumers. Noting that MTRs account for as much as 20% of EU operator revenues, the report claims that, if the proposed MTR rate cuts are implemented, carriers are likely to raise tariffs in other areas to recoup the lost revenues. Along that vein, the study predicts that a 10% reduction in MTRs would lead to a 10% increase in retail prices. While EU wireless customers generally pay only for those calls that they make under a “calling party pays” regime, the study further warns that MTR cuts could induce some carriers to charge for calls received as is done in the U.S., which could lower wireless penetration rates to levels resembling that of the U.S. (In Europe, wireless penetration rate currently exceeds 100%, while in the U.S., the penetration rate stands at 85%.) Dismissing the report as one that is “one-sided” and lacks “intellectual strength,” Reding observed, “there are fundamental flaws in the analysis,” which therefore “cannot be taken seriously.”