Third Session - Thirty-Fifth Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on PUBLIC UTILITIES and NATURAL RESOURCES 39-40 Elizabeth II Chairperson Mr. Jack Penner Constituency of Emerson VOL. XLI No.1 -10 a.m., TUESDAY, APRIL 28,1992 MG-8048 ISSN0713-9454 Printed by the Office of the Queens Printer, Province of Manitoba MANITOBA LEGISLATIVE ASSEMBLY Thlrty·Fifth Legislature Members, Constituencies and Political Affiliation NAME CONSTITUENCY PARTY. ALCOCK, Reg Osborne Liberal ASHTON, Steve Thompson NDP BARREn, Becky Wellington NDP CARSTAIRS, Sharon River Heights Liberal CERILLI, Marianne Radisson NDP CHEEMA, Guizar The Maples Liberal CHOM IAK, Dave Kildonan NDP CONNERY, Edward Portage Ia Prairie PC CUMMINGS, Glen, Hon. Ste. Rose PC DAC QUAY, Louise Seine River PC DERKACH, Leonard, Hon. Roblin-Russell PC DEWAR, Gregory Selkirk NDP DOER, Gary Concordia NDP DOWNEY, James, Hon. Arthur-Virden PC DRIEDGER, Albert, Hon. Steinbach PC DUCHARME, Gerry, Hon. Riel PC EDWARDS, Paul St. James Liberal ENNS, Harry, Hon. Lakeside PC ERNST, Jim, Hon. Charleswood PC EVANS, Ciif Interlake NDP EVANS, Leonard S. Brandon East NDP FILMON, Gary, Hon. Tuxedo PC FINDLAY, Glen, Hon. Springfield PC FRIESEN, Jean Wolseley NDP GAUDRY, Neil St. Boniface Liberal GILLESHAMMER, Harold, Hon. Minnedosa PC HARPER, Elijah Rupertsland NDP HELWER, Edward R. Gimli PC HICKES, George Point Douglas NDP LAMOUREUX, Kevin Inkster Liberal LATHLIN, Oscar The Pas NDP LAURENDEAU, Marcel St. Norbert PC MALOWAY, Jim Elmwood NDP MANNESS, Clayton, Hon. Morris PC MARTINDALE, Doug Burrows NDP McALPINE, Gerry Sturgeon Creek PC McCRAE, James, Hon. Brandon West PC MciNTOSH, Linda,Hon. Assiniboia PC MITCHELSON, Bonnie, Hon. River East PC NEUFELD, Harold Rossmere PC ORCHARD, Donald, Hon. Pembina PC PENNER, Jack Emerson PC PLOHMAN, John Dauphin NDP PRAZNIK, Darren, Hon. Lac du Bonnet PC REID, Daryl Transcona NDP REIMER, Jack Niakwa PC RENDER, Shirley St. Vital PC ROGAN, Denis, Hon. Gladstone PC ROSE, Bob Turtle Mountain PC SANTOS, Conrad Broadway NDP STEFANSON, Eric, Hon. Kirkfield Park PC STORIE, Jerry Ain Flon NDP SVEINSON, Ben La Verendrye PC VODREY, Rosemary, Hon. Fort Garry PC WASYLYCI A-LEIS, Judy St. Johns NDP WOWCHUK, Rosann Swan River NDP 1 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES AND NATURAL RESOURCES Tuesday,Ap�l28,1992 TIME- 10 a.m. considering the December31 , 1990, AnnualReport LOCATION-Winnipeg, Manitoba of the Manitoba Telephone System. CHAIRPERSON- Mr.Jac k Penner (Emerson) I would invite the minister responsibleto make an ATIENDANCE• 10- QUORUM· 6 opening statement to introduce officials present Members of the Committee present: from the Manitoba Telephone System. Hon. Messrs. Cummings, Rndlay .. (1 005) Messrs. Alcock, Dewar, Evans(Brandon East), Hon. Glen Findlay (Minister responsiblefor the Gaudry, Laurendeau, McAlpine, Penner, administration of The Manitoba Telephone Act): Sveinson Mr. Chairperson, committee members, ladies and APPEARING: gentlemen, it is a pleasure to have the opportunity, here with the Chairman of the ManitobaTelephone Gary Doer, MLA for Concordia System, Mr. Tom Stefanson; and President and Tom Stefanson, Chairperson, Manitoba CEO, Mr. Oz Pedde; and two Vice-Presidents,Barry Telephone System Gordon and Bill Fraser, to review the 1990Manitoba Oz Pedde, President and Chief Executive Telephone System Annual Report. Officer, Manitoba Telephone System Members of the committee who were present at Bill Fraser, Vice-President, Rnance, Manitoba these meetings over the past twoyears recall that I Telephone System have emphasized that MTS, with thegovernment's encouragement, pursued a businesslike approach Barry Gordon, Vice-President, Network to its operations, has been able to reportcont inuing Services,Manitoba Telephone System progress in improving its financial performance as MATIERS UNDER DISCUSSION: well as thequality and extent of itsservices. Annual Report of the Manitoba Telephone The 1990 annual report of the corporation System for the year ended December 31, 1990. provides clear evidence of the prudence and the ...... successof thisapproach because it showsthat this Madam Clerk (Ms. Patricia Chaychuk­ progress has continued throughout the reporting Fitzpatrlck): Order, please. Will the Standing year of 1990. Committee on Public Utilities and Natural Moving away from the significant losses in 1986 Resources please come to order. We must proceed and 1987, MTS reported net earnings of over $15 to elect a Chairperson. Are there any nominations? million in 1988; another rise to over $35 million in 1989; and the figures show in thisreport now before Mr. Gregory Dewar (Selkirk): Yes, I move that the committee, the net earnings at the end of 1990 Jack Penner be the Chairperson. were $39,456,000. Madam Clerk: Mr. Penner has been nominated. The significant portion of MTS' revenues are, of Are there any other nominations? As there are no course, derived from out-of-province long distance other nominations, Mr. Penner has been elected telecommunications traffic, revenues from which Chairperson. Please come and take the Chair. are shared among Canadian telecommunications Mr.Chairperson: I would like to call this committee carriers. MTS will comment on the relationship to order. Will the Standing Committee on Public between long distance revenue sharing and the Uti lities and Natural Resources please come to lowered net revenues achieved by the company in order. This morning the committee will be 1991. 2 LEGISLATIVEAS SEMBLY OF MANITOBA April 28, 1992 Notwithstanding these effects and a general interconnection for certain switched data services. downturn in the economy, MTS still was able to An application with respect to rates for access to the report positive net earnings in 1991 . We believe MTS network has been submitted to the PUB. that this resilience is additional evidence of the wisdom of our earlier decisions to put MTS on a MTS has been working hard to lower rates in sound businesslike footing. out-of-province long distance services to other Canadian points, which benefits both residential Just as MTS is affected by national economic and business customers. Since 1987 these rates trends, it is also affected by developments taking have fallen by 47 percent. Overthe pastthree years place generally throughout the communications alone, they have dropped by 38 percent. industry. The most significant ongoing development is the growth of choice for * (1 010) telecommunications users. In January of 1991 , the federal Minister of Last year, I noted that CRTC was reviewing an Communications and I signed a Memorandum of application by Unitel which requested permission to Understanding that sets a framework for the compete withfederally regulated carriers in the long transition from provincial to federal regulation of distance telephone service market. The MTS, which represents a solid accomplishment to commission has yet to announce its decision. address sensitive federal-provincial Issues. However, I would note thatthe regulation of MTS by During the CRTC's hearings, Manitoba took the theCRTC will nottake place until Parliamentpasses position that it is not opposed In principle to the the appropriate telecommunications legislation, conceptof competition inthe long distance market, which was recently introduced in the House of but urged the commission to ensure that any Commons. decision it might take protect the universality of service and the affordability of basic service for From a policy perspective then, we continue to ordinary telephone users. work to anticipate the changing needs for Manitobans in the context of broad national Our policies in telecommunications recognize telecommunicationstrends and developments. We that Manitoba telephone users want freedom of also have shown that we are ready to respond choiceand that Manitoba businesses need to keep quickly and constructively to initiatives taken costs low in order to compete on a national or even elsewhere thatwill have an impact on Manitoba. international basis. We have supported the introduction of greater Over the past three years, we have tended to competition in telecommunications markets. Last Manitoba's telecommunicationsneeds as theyexist year, I announced a policy to permit Manitoba within the province itself. Our major six-year businesses that purchase or lease their telephone program to improve telephone service for virtually equipment from private suppliers to connectit to the all telephone users in Manitoba is continuing. MTS network. At the same time, I also announced By way of a reminder, this program, at a cost of a policy to allow businesses and indeed private almost $800 million, has these major elements: intercity lines to have the choice ofusing Canadian 47,000 multiparty residential business customers carriersother than MTS. These policies were given are being convertedto individual line service;by the effect following hearingsby the Public Utilities Board end of January nearly 1 6,000, or 34 percent of those of Manitoba. Consequently, the users of business customers, received this service under part of the terminal equipment are enjoying the benefits of program in 56 telephone exchanges throughoutthe choice, moreover because these products are province; over 4,000 customers, roughly 3,800 in subjectto vigorous competition in the marketplace, Winnipeg and 260 in Brandon, have subscribed to where the regulator now sets prices. Urban Unlimited service,enabling them to reduce By approving requested rates for accessto