Public Values

Manitoba Telephones, ten years later

Customers, workers, complain that privatized company puts profits before service.

Manitoba Telephones, ten years laterby Shauna MacKinnon, Manitoba CCPA

A dozen years ago, Manitoba Conservative Party Premier Gary Filmon — campaigning for re-election — told reporters that his government had no plans to privatize the Manitoba Telephone System, a 90 year-old Crown corporation. A year later, in the face of widespread public opposition, he rammed legislation authorizing the sale through the provincial legislature. At the start of 1997 a new corporate entity, Manitoba Telecom Services came into being. Ten years later, it is worthwhile to attempt to determine who won and who lost as a result of privatization.

As a Crown corporation, MTS belonged to the people of Manitoba. Their investments had created it and if it were sold they should have received the best possible price. According to the Canadian Radio Television-Telecommunication Commission (CRTC) the Filmon government sold MTS at less than its market value. Most of those well-off Manitobans who bought the undervalued stocks, flipped them for a quick profit. As early as 1998, investment dealers were estimating that Manitobans owned less than 20 percent of MTS stock.

Oddly enough the government did not undervalue the people whom it had appointed to MTS management and directors when it privatized the company. They received dramatic pay raises and generous stock options.

As a Crown corporation, MTS's mandate was to provide all Manitobans with affordable, accessible service. Money that a privately owned corporation would have shipped out of province remained in Manitoba. As a private corporation, MTS has been driven by a mandate to cut costs and increase returns to out-of-province investors.

Even though the Filmon government stated that privatization would not lead to rate increases, the privatized MTS aggressively sought rate increases. Basic service in Winnipeg cost $17.55 a month in 1997. It now costs $24.10, an increase of 37 percent for a period when the cost of living only rose by 23 percent.

According to the three unions at MTS, employment levels and service have been dramatically affected by privatization. Some change was inevitable: there is no denying that changes in technology do make it possible to provide some services with fewer people. Whether MTS was a private or public corporation, it was likely to have branched out into wireless telephone, television and internet services.

However masked by the expansion of some new services, the extent of job loss at MTS has been dramatic. The Communications Energy and Paperworkers Union has seen its numbers go from 1,750 members in 1996 to 1,000. The International Brotherhood of Electrical Workers has gone from 1,200 to 700, while the Telecommunications Employees Association of Manitoba has gone from 1,100 to 1,000.

In many cases, full-time work has been converted to part-time. In others, full-time employees have been told that they are expected to work unpaid overtime. Contractors have been hired to do regular full-time work, in many cases at higher overall cost. Some services have been contracted out to out-of-province providers: viz, there are no 411 operators in Manitoba and the White and Yellow Pages are now owned by a company based in Quebec — resulting in the loss of another 70 Manitoba jobs.

During its Crown corporation days, MTS maintained jobs and offices located throughout the province. As one sales representative explained, in those days the company was expected to be close to its customers. Today most of those rural offices are all but empty, with the employees given the choice of either relocating to Winnipeg (or Brandon) or losing their jobs. Northern Manitoba First Nations have spent much of the last decade complaining to the CRTC about MTS, seeking improved services to remote communities.

Representatives from the company's three unions and their members all raise the same issue in discussions: a major change in the culture of the corporation that amounts to a move away from a Crown corporation commitment to, staff, craft and service. As one employee said, "We are not servicing the customers who made us what we are and that is a shame."

Another union member said that the company attitude about poor service is, "the customer will get used to it." There are now special service packages that MTS staff are instructed to offer only to members of the general public who specifically ask about them.

Increasingly, installation is being contracted out to private companies. The unions have raised concerns that the company's inability to monitor this work will encourage installers to cut corners resulting in long-term impacts on the quality of the service.

Similarly, the company has contracted out the operation of its phone centres. As a result, most of the people working in the centres are part-time, low-wage retail clerks who often change jobs before they develop a strong sense of MTS's services. In the 1980s the stress and pace of work for MTS telephone operators led to a major crisis as many operators walked off the job. An outside review of the workplace concluded that the problem was the "automated, repetitive, routine, closely measured" nature of the work. After some initial resistance, MTS management worked with the union to get rid of much of the electronic monitoring of workers, allowed workers more input into shift scheduling, and encouraged workers to use their knowledge of the system to provide greater service to customers rather than limiting what they could do.

Privatization spelled the end of most of those improvements. All three unions report ongoing issues with stress — in many cases because staff members are disturbed by the fact that they can no longer provide the same level of service that they once did. While technical staff worry about the lack of maintenance, sales staff are upset that small businesses and residential customers cannot get the personal service they once did. TEAM has a complaint before the Canadian Human Rights Commission that the company has targeted sick workers for dismissal.

Prior to the privatization, MTS employees participated in the provincial government pension plan. Under the privatization plan, the government plan was supposed to be replaced with a plan of equal value. However, according to a lawsuit launched by unions and retirees, the new plan has, over the past 10 years, withheld $100-million that could have been used to provide the sorts of improvements that have been made to the provincial government pension plan since MTS's privatization.

At the time of the privatization, the Manitoba government argued that MTS could not compete as a Crown corporation in the rapidly evolving world of global telecommunications. Oddly enough, just next door in Saskatchewan, SaskTel (another Crown corporation) has been able to provide the same services that MTS does at competitive prices.

SaskTel employs nearly 4,000 people in over 50 Saskatchewan communities. Relations between the Crown corporation and its employees are not necessarily all love, trust and pixie dust, but the company remains rooted in the community, maintains a high level of employment, and any surplus is invested back into the community.

Shauna MacKinnon is the Director of the Canadian Centre for Policy Alternatives – Manitoba. She can reached at the eddress below.

Links and sources
  Shauna MacKinnon, Director CCPA – Manitoba

Posted: November 11, 2007

  Public services
  Voices of privatization

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