Privatization brings higher costs, fewer jobs

Hey there, time traveller!
This article was published 29/12/2020 (1752 days ago), so information in it may no longer be current.

MANITOBA Hydro chief executive officer Jay Grewal said this fall that in the future, the Crown corporation may cease to have a monopoly on the distribution of electrical power. This revived public concerns that the provincial government is considering privatizing Hydro.

While Manitoba Hydro publicists were quick to assure people that nothing could be further from the truth, there is no avoiding the fact that few things please the current government more than selling off public assets: witness the ongoing privatization of public housing.

The recent revelation that the government has instructed Manitoba Hydro International (the arm of the corporation involved in international consulting) and Manitoba Hydro Telecom (which provides broadband services in rural and northern Manitoba) to stop pursuing new and existing projects suggests the province is considering hiving off, and disposing of, portions of the corporation.

In the case of Manitoba Hydro Telecom, it appears the government may be getting ready to turn its northern and rural broadband network over to Bell MTS.

Manitobans with long memories will recall that Manitoba once owned MTS (which was then called the Manitoba Telephone System). They will also recall that in the 1995 election campaign, Progressive Conservative premier Gary Filmon assured Manitobans that nothing could be further from the truth than the rumours that his government was thinking of selling MTS.

The following year, his government pushed through legislation that led to the privatization of MTS in 1997 at a price that the Canadian Radio-television and Telecommunications Commission estimated was less than its market value. And while MTS’s senior managers were treated to significant pay increases, the company’s employees had to fight a 17-year court battle to regain the full benefit of their pension plan.

In the workplace, increases in the pace of work and layoffs were the order of the day. Profits and jobs were shipped out of province. Comparisons with Sasktel, the last provincially owned telecommunications company in the country, regularly showed that privatization had led to higher service costs and reduced benefits to Manitobans.

But apparently things could get worse. As a provincially based corporation, the privatized MTS competed with Bell, TELUS and Rogers for a share of the telecommunication market, and the presence of MTS exerted a downward force on prices. In markets where Bell, TELUS and Rogers faced no regional competitor, prices were higher and less competitive. Go figure.

The big boys would not tolerate such a situation, and in 2016 Bell announced the desire to buy MTS. The Canadian Media Concentration Research Project raised warning flags about the takeover. In a report, Benjamin Klass and Dwayne Winseck noted that when compared to Bell, MTS invested more of its capital in its networks (meaning it provided better service) and that most MTS operations “compare either favourably with or are performing better than anything Bell offers throughout its own territories.”

They cautioned that allowing the takeover “would result in increased prices above the competitive levels that currently prevail.”

Despite this, the federal government let Bell buy MTS. The strong regional competitor is gone, and surprise, surprise — Manitoba’s telecommunication costs have risen. Klass and Winseck also warned that the sale of MTS to Bell would jeopardize “unique and innovative options that people value greatly, notably unlimited mobile data.” At the time of the sale, only MTS and SaskTel offered unlimited mobile data. A year after taking over MTS, Bell cancelled the service for new customers.

Bell MTS has continued to shed jobs. When Bell bought MTS, 623 unionized workers were employed there: the figure is down to 490. The number of Unifor union members employed by the company has fallen from 850 to 660. The Telecommunications Employees Association of Manitoba has also reported job losses since Bell took over.

So, nearly a quarter-century into privatization, what was once a provincially controlled telecommunications system is now owned by an eastern Canadian corporation, which alongside two other large corporations is raising rates and cutting service. The fact the corporation is referred to as Bell MTS should not fool anyone: the “MTS” is little more than the leftover bit of jam that adheres to the plutocrats’ lips after a satisfying chow-down. In other words, it is branding and nothing more.

History rarely repeats itself exactly, but it often rhymes. Given this history, Manitobans would be well advised to ask themselves if the provincial government is not preparing to take Manitoba Hydro to market.

Doug Smith is a Winnipeg writer and researcher.

This is a shortened version of a column prepared for the Canadian Centre for Policy Alternatives – Manitoba.