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                       SUBJECT / SUJET:

                      COMMUNICATIONS INC.

HELD AT:                                TENUE À:

Delta Winnipeg                          Delta Winnipeg
288 Portage Avenue                      288, avenue Portage
Winnipeg, Manitoba                      Winnipeg (Manitoba)

November 7, 1998                        7 novembre 1998

tel:  613-521-0703         StenoTran     fax:  613-521-7668



Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.


                 Canadian Radio-television and
                 Telecommunications Commission

              Conseil de la radiodiffusion et des
                télécommunications canadiennes

                  Transcript / Transcription

            Public Consultation / Consultation publique

MTS Communications Inc. mechanism to recover future income tax 
expense /  Méchanisme de recouvrement de impôts futurs de MTS
                      Communications Inc.


David Colville                    Chairperson / Président
                                  Telecommunications /
David McKendry                    Commissioner / Conseiller
Martha Wilson                     Commissioner / Conseillère


Geoff Batstone                    Commission Counsel /
                                  Avocat du Conseil
Prospero Vito                     Hearing Manager / Gérant de
Gary Krushen                      Secretary / Secrétaire

HELD AT:                          TENUE À:

Delta Winnipeg                    Delta Winnipeg
288 Portage Avenue                288, avenue Portage
Winnipeg, Manitoba                Winnipeg (Manitoba)

November 7, 1998                  7 novembre 1998





Presentation by / Présentation par:

Mr. Steve Ashton                                             7

Ms Gloria Desorcy                                           21

Mr. Charles Cruden                                          29

Canadian Association of the Non-Employed                    37

Manitoba League of Persons with Disabilities                41

Consumers' Association of Canada, Manitoba Branch /         47
Manitoba Society of Seniors

Ms Judy Wasylycia-Leis                                      56

Retired Teachers' Association of Manitoba                   65

Manitoba Federation of Union Retirees                       72

Ebb and Flow School                                         75

Ms Marlene Vieno                                            79

Mr. Edward Natiation                                        83

Ms Helen Christopher                                        85

Mr. A.C. Swain                                              94

Telecommunications Employees' Association of Manitoba      105

Mrs. Anne Skuba                                            108

Credit Union Central Manitoba                              111

Ms Iola Nicklas                                            115

Ms Emile Clune                                             117

Mr. Wignall                                                124

CHOICES                                                    133




Presentation by / Présentation par:

Mr. Broughton                                              144

Mr. Gaston Boulanger                                       146

First Nations Buying Group                                 149

Mr. Eric Robinson                                          150

Manitoba Chamber of Commerce                               160

KLINIC                                                     163

Ms Trujillo                                                166

Ms Rosemary Miguez                                         167

Ms Jo Wright                                               173

Mr. Kenneth Emberley                                       177

Ms Elizabeth Semkiw                                        189

Reply on behalf of / Réplique au nom de

Manitoba Telecom Services                                  192



 1                    Winnipeg, Manitoba / Winnipeg (Manitoba)
 2     --- Upon commencing on Saturday, November 7, 1998
 3         at 0900 / L'audience débute le samedi
 4         7 novembre 1998 à 0900
 5  1                    THE CHAIRPERSON:  Order, please,
 6     ladies and gentlemen.  I would like to say good morning
 7     to all of you and welcome you to this public
 8     consultation.
 9  2                    My name is David Colville.  I am
10     Vice-Chair, Telecommunications, for the CRTC and I will
11     be the Chair for today's session.  Seated next to me
12     are Commissioners David McKendry and Martha Wilson.
13  3                    Also seated here are a number of our
14     Commission staff, including our hearing secretary,
15     Mr. Gary Krushen, from our Winnipeg CRTC office here,
16     legal counsel Geoff Batstone sitting in the middle, and
17     our team leader for this issue, Prospero Vito.  I
18     invite you to call upon any of these people for any
19     questions or help or assistance you may have with
20     respect to the process, the procedure for today's
21     consultation.
22  4                    Before we begin a more formal process
23     today, I would like to say that we are happy to be here
24     in Winnipeg and are pleased to have this opportunity to
25     hear your views on this important issue with respect to


 1     the MTS application.  As you know, this public
 2     consultation is part of a written process designed to
 3     explore the appropriateness and timing of MTS
 4     opportunity to recover costs associated with income
 5     tax.  You may also be aware that the original procedure
 6     for this application did not include an oral hearing,
 7     but after receiving a number of letters from
 8     subscribers and other groups requesting that we hold an
 9     oral hearing, the Commission looked at the procedure
10     again and concluded that a public hearing or public
11     consultation should be held in Manitoba.  I was saying
12     to some of my colleagues I noticed a card in the room
13     at the hotel here that says, "You talk.  We listen."  I
14     guess it could apply to our being here today.
15  5                    I should note also that I guess we
16     decided to do this on a Saturday because of the fact
17     that there were a lot of individuals and consumer
18     groups who were requesting that we conduct this
19     consultation and felt that a Saturday might be more
20     appropriate than a weekday and provide an opportunity
21     for people to come out for this rather than have to
22     take time off from work or indeed not be able to appear
23     because they couldn't take time off from work.  So
24     that's why we chose a Saturday, and we hope that's not
25     too inconvenient for people to give up time on your


 1     Saturday to be here.
 2  6                    So I want to take this opportunity to
 3     thank all of those who did write and request that we
 4     have this public consultation.  I think it is an
 5     important part of the dialogue.  We appreciate the fact
 6     that you did request it and we are certainly happy to
 7     be here to hear what your concerns are.
 8  7                    We will sit this morning until about
 9     12:30; we don't want to interrupt somebody's
10     presentation, so it will be around 12:30 depending on
11     the appropriateness of the presentation at the time. 
12     We will take a break for lunch -- and I think we will
13     probably only take about a half-hour break for lunch --
14     reconvene at about one o'clock, and we will sit until
15     5:00.
16  8                    My understanding is we in fact only
17     have this room until five o'clock -- I believe there is
18     another event going on -- and we have 33 people who are
19     going to be appearing or who have registered to appear
20     today.  I might note those people who have registered
21     will be called by Mr. Krushen by name.  If there is
22     anybody else here in the audience who wishes to make an
23     oral submission but who has not already registered, I
24     would ask that you give your name to Mr. Krushen,
25     advise him, and, time permitting, we will try to fit


 1     you into the schedule before the day is over.
 2  9                    Any participant who is not in
 3     attendance when Mr. Krushen calls their name, we will
 4     call later in the day should they arrive a little later
 5     on.  We want to give everybody an opportunity to be
 6     heard.
 7  10                    In that respect, again, there are 33
 8     people who want to appear, and that really works out to
 9     about 10 minutes per presentation.  We want to make
10     sure that everybody does get an opportunity to be
11     heard, so, with a little regret, I think we are going
12     to have to be fairly strict and rigid in terms of the
13     time lines here in order to provide an opportunity for
14     everybody to be heard.  So I hope you will bear with us
15     with respect to that.
16  11                    We may wish to ask a question or two
17     of clarification on your presentation.  I want to
18     emphasize, from our point of view, despite the somewhat
19     formality of appearance here, with microphones and all
20     this electronic equipment, we are trying to make this
21     informal and make you feel welcome to express your
22     views before us.  But, if you are uncomfortable about
23     answering any questions, just say so; we are not here
24     to embarrass you or to try to trip you up or trick you
25     or anything.  We just want to hear what you have to say


 1     about the issues here today.
 2  12                    So I guess at this point, with those
 3     opening comments, I will turn it over to Mr. Batstone
 4     to make a few comments on process for the day.
 5  13                    MR. BATSTONE:  Thank you,
 6     Commissioner Colville.
 7  14                    As Commissioner Colville has already
 8     mentioned, the Secretary will call out the names of the
 9     presenters, starting with the parties that have
10     registered in advance.  When your name is called, just
11     come forward to the table upfront here, to one of the
12     microphones.
13  15                    The submissions at today's
14     consultation will be transcribed and will form part of
15     the record of this proceeding.  So, to ensure that the
16     court reporter is able to produce an accurate
17     transcript, we would ask you, when you are speaking, to
18     please ensure that the microphone is turned on.  If you
19     would like to purchase a copy of the transcript, you
20     should make the arrangements with the court reporter
21     who is sitting behind us here on the raised platform.
22  16                    In addition to your oral submissions
23     at this consultation, I would just like to remind
24     everybody that written comments on the issues that are
25     being considered in this proceeding may be submitted to


 1     the Commission by November 20th.  Like the transcript,
 2     those comments will also form part of the record for
 3     this proceeding.
 4  17                    After everyone is finished with their
 5     presentations we will take a short break, after which
 6     representatives from MTS will be given an opportunity
 7     to respond to any comments raised in the course of
 8     today's session.  Of course, MTS may also address any
 9     comments raised during this consultation in the course
10     of its final argument, which is to be filed by
11     November 24th.
12  18                    THE CHAIRPERSON:  Thank you very
13     much.
14  19                    I know that Mr. Bill Fraser from MTS
15     is here and I would just like to give him an
16     opportunity to perhaps introduce some of his colleagues
17     who are with him.
18  20                    Mr. Fraser.
19  21                    MR. FRASER:  Thank you, Mr. Chairman.
20  22                    I am Bill Fraser, President and Chief
21     Executive Officer of Manitoba Telecom Services.  With
22     me today I have Cheryle Barker, who is our Chief
23     Financial Officer, Roy Bruchshow, who is our Director
24     of Regulatory Affairs, and June Kirby, who is our
25     Director of Communications.


 1  23                    Thank you.
 2  24                    THE CHAIRPERSON:  Thank you very
 3     much.
 4  25                    As indicated, Mr. Fraser will have an
 5     opportunity to comment on any of the submissions that
 6     he has heard through the day at the end of the day; we
 7     will provide an opportunity for that.
 8  26                    With that, Mr. Secretary,
 9     Mr. Krushen, perhaps we will turn to our first
10     submission.
11  27                    MR. KRUSHEN:  Thank you, Commissioner
12     Colville.
13  28                    The first presentation this morning
14     will be by Mr. Steve Ashton, Member of the Legislative
15     Assembly for Thompson.
16  29                    Mr. Ashton.
17  30                    THE CHAIRPERSON:  Good morning,
18     Mr. Ashton.  I expect, with this Christmas tree we have
19     over here, those are probably not letters to Santa
20     Claus.
21  31                    MR. ASHTON:  But they are letters and
22     resolutions to the CRTC, and we are hoping you will
23     give us a Christmas present and rule favourably given
24     our concerns about the proposed rate increases.


 1  32                    MR. ASHTON:  I just, by way of
 2     introduction, want to indicate that, in addition to
 3     being the MLA for Thompson, I am also the
 4     telecommunications critic for the opposition, for the
 5     NDP, including MTS critic.  I know there is some
 6     feeling sometimes that MTS, now that they have been
 7     privatized, don't have to be accountable to individuals
 8     such as myself and Manitobans, but I think the CRTC
 9     hearings today show that there is a level of
10     accountability, and that's what I am going to be
11     addressing my comments to.
12  33                    I will try to keep my comments fairly
13     brief.  I understand the number of presenters.  I would
14     like to indicate, though, that I have some
15     resolutions -- not the verbatim resolutions, but
16     resolutions from about 30 or 40 municipalities; so it
17     may take me a little bit longer just to be able to read
18     those into the record.
19  34                    THE CHAIRPERSON:  If I can just
20     interrupt, we would be certainly happy to take those in
21     writing too.
22  35                    MR. ASHTON:  Okay.  In fact, many of
23     the resolutions have been sent in, but I know some of
24     the resolutions may not have been forwarded, and some
25     of the municipalities asked me to pass that on.


 1  36                    I just want to begin by a brief
 2     comment, which is to indicate that there is a clear
 3     message I have got from many individuals and municipal
 4     councils throughout Manitoba, and that is that they
 5     feel very clearly that MTS should pay its own taxes;
 6     they feel that MTS is receiving a significant profit,
 7     and I notice the third quarter statement confirms that. 
 8     Quite frankly, one of the comments I heard time and
 9     time again is that people in this province don't expect
10     someone else to pay their taxes; in this case, they say
11     the same should apply to MTS.
12  37                    I want to give a bit of background on
13     it as well because you have to put this in the context
14     of what has happened to MTS in the last number of
15     years, particularly the privatization.  What I find
16     ironic, as someone who was very involved in fighting
17     the privatization of MTS -- the government had never
18     campaigned on that as a mandate, never once had support
19     from the people of Manitoba; in fact, 80 per cent of
20     the population of Manitoba opposed the privatization of
21     MTS.  What I found ironic was, when we raised issues,
22     in the Manitoba Legislature, or concerns about the
23     impact on rates of privatization, we were told at the
24     time that there would not be any impact on rates
25     because of privatization.  I can show you quotes from


 1     the Premier, I can show you quotes from the Minister
 2     responsible for MTS at that time.
 3  38                    Not only that, Mr. Nugent, who I know
 4     you will be quite aware of from presentations to the
 5     CRTC, who was counsel for the CRTC, made comments to
 6     the CRTC at the time which we quoted in the Legislature
 7     which indicated concern over potential for a rate
 8     shock.  One of the issues was indeed, in terms of
 9     taxation, the very issue you are dealing with today.
10  39                    Mr. Nugent was disowned by the
11     Premier at the time, his comments were disowned I
12     believe by MTS -- highly unusual given Mr. Nugent's
13     excellent reputation as counsel.  I don't have the
14     newspaper article here, but I do note that when this
15     application came in I believe Mr. Nugent -- I don't
16     think he used the exact words "I told you so", but they
17     were very close to that.
18  40                    I want to put on the record, quite
19     frankly, that there are a number of people in this
20     province who owe an apology to Mr. Nugent for not
21     listening to his comments back then.  I suspect part of
22     it was the political agenda at the time, and I do want
23     to put that on the record because I think that's fairly
24     clear.
25  41                    I also want to indicate my


 1     frustration that the provincial government has chosen
 2     not to make a presentation.  I can explain, there may
 3     be a slight problem in that Mr. Jules Benson, who
 4     represents the government, at times, with the golden
 5     share -- the government still has a golden share in
 6     MTS -- has been suspended by the Premier.  We are not
 7     sure from reports whether it is because he lied to the
 8     Premier or didn't, but he has been suspended for his
 9     role in the current scandal that's part of the
10     Commission of Inquiry on Vote Splitting.
11  42                    But I do want to indicate on the
12     record I think it is just incredible that the
13     provincial government, which in many ways set in motion
14     the hearings today by privatizing MTS and raising this
15     whole question of taxation on MTS, has chosen not to be
16     one of the 31 presenters.  I can understand why because
17     I am sure many of the presenters would probably want to
18     ask the government questions why it said one thing when
19     it was selling off the company and we are seeing
20     something completely different.
21  43                    I want to begin by saying, in terms
22     of the communities -- I can read through some of the
23     communities, and I have been asked to do this by a
24     number specifically.  If you ever get a chance to get a
25     map, there are many of these communities -- I am from


 1     northern Manitoba and I am not sure where all of the
 2     communities and RMs are.  You need a map to track it,
 3     but I can tell you they represent a cross-section of
 4     the communities of Manitoba.
 5  44                    The resolution states:
 6                            "WHEREAS MTS is seeking another
 7                            increase in local rates of 40
 8                            per cent over five years; and
 9                            WHEREAS the CRTC application is
10                            for local rates to be raised to
11                            pay the entire federal and
12                            provincial income tax bills of
13                            MTS; and
14                            WHEREAS MTS has already received
15                            numerous rate increases in
16                            recent years; and
17                            WHEREAS a further increase would
18                            make it difficult for many
19                            people to be able to afford
20                            keeping their basic telephone
21                            service;
22                            THEREFORE, BE IT RESOLVED... the
23                            CRTC to reject the Manitoba
24                            Telephone Notice 1998-12
25                            Application and any further


 1                            dramatic increases in local
 2                            rates."  (As read)
 3  45                    That resolution was passed by the RM
 4     of Blanchard, Oak River, the RM of Park -- that's rural
 5     municipality -- the Rural Municipality of Birtle, the
 6     City of Dauphin, the God's Lake Narrows Community
 7     Council, the Dallas Red Rose Community Council, the
 8     Rural Municipality of Shoal Lake, the Town of The Pas,
 9     the Rural Municipality of Kelsey, which is in the
10     surrounding area around The Pas, the Village of
11     McCreary, the Village of Winnipegosis, the Village of
12     Cartwright, the Town of Grandview, the Town of Roblin,
13     the Rural Municipality of McCreary, the Village of
14     St. Lazare, the Rural Municipality of Ellice -- I am
15     about one-third of the way through -- the Municipality
16     of Saskatchewan; there is a Municipality of
17     Saskatchewan in Manitoba, by the way, just so it
18     doesn't get confused; the Village of Glenboro, the
19     Rural Municipality of Russell, the Rural Municipality
20     of Rossburn, the Rural Municipality of St. Jean, the
21     Manitowogan Community Council, the Rural Municipality
22     of Lansdown, the Village of Binscarth, the Rural
23     Municipality of St. Laurent, the Municipality of North
24     Norfolk, the City of Steinbach, the Rural Municipality
25     of Ochre River, the Rural Municipality of Armstrong,


 1     the Rural Municipality of Ste. Anne -- I am about
 2     halfway through -- the Rural Municipality of
 3     Springfield, the Town of Morris, the Rural Municipality
 4     of Shellmouth, the Rural Municipality of Broken Hat,
 5     the Rural Municipality of Holton, the City of Brandon,
 6     the Rural Municipality of Strathclair, the Rural
 7     Municipality of Grandview, the Rural Municipality of
 8     Rosser, the Rural Municipality of Roblin, the Rural
 9     Municipality of Ellice -- I'm getting there -- the
10     Rural Municipality of Swan River, and I can indicate
11     the City of Thompson has also passed a resolution like
12     that.  These, by the way, are just resolutions of which
13     I received a copy; you may have received other
14     resolutions that were sent to you directly.
15  46                    I want to indicate that's pretty well
16     a cross-section of the province:  the second largest
17     city, the third largest city, most of the regional
18     cities and towns, some of the smaller rural
19     municipalities.  I also have received resolutions, I
20     should mention, from a number of First Nations
21     communities, including Norway House.
22  47                    The clear message from Manitobans is
23     concern about the kind of rate increases we are looking
24     at.
25  48                    If you look at the impact, I find it


 1     interesting in a way that MTS in its own documentation
 2     I think points to the fact that, if you approve this in
 3     its entirety, you will be moving us from a position a
 4     number of years ago where we had some of the cheapest
 5     rates in North America to where we will have some of
 6     the highest local rates.
 7  49                    When we raise concerns about rates -- 
 8     MTS issued "Telephone Rates Still a Bargain".  I found
 9     this rather ironic, by the way, because, if one takes
10     the rate structures they use -- and, by the way, they
11     are a bargain because we had a publicly-owned phone
12     company that did an excellent job at keeping rates
13     affordable in this province for many years.  But, if
14     you simply add in the kind of rate increases that are
15     being requested to cover the income taxes, you will see
16     in each and every one of these communities, by the way
17     MTS' own argument -- you will not see a similar sort of
18     increase in terms of other phone companies, but it will
19     move us in most cases to the top end of the scale.
20  50                    I can indicate one of the concerns,
21     why so many rural municipalities are concerned.  We
22     have already had a rate restructuring within the
23     province, we have had a number of increases.  I know
24     the CRTC did say "no" to the recent rate increase of
25     $3; it was rolled back fairly significantly.  It will


 1     have a real impact.
 2  51                    I have comments from many
 3     individuals.  Once again I could spend probably all day
 4     reading it, but out of respect to the many other
 5     presenters I won't; but I am hearing from many
 6     individuals who are absolutely frustrated.  I thought I
 7     would just read a couple of them because it will give
 8     you some sense of why people are concerned.
 9  52                    Mary Cooper in northern Manitoba, who
10     is a business person, wrote:
11                            "No one paid my taxes when I was
12                            in business.  The investors of
13                            MTS took their chances when they
14                            invested in MTS, just as I do
15                            when I invest in stocks. 
16                            People, particularly on fixed
17                            incomes, will not be able to
18                            afford this increase.  Maybe
19                            that's what MTS wants."
20  53                    Another one from an MTS employee who
21     does not want the increase:
22                            "Forty per cent over five years? 
23                            I don't get that as an
24                            employee."
25  54                    That's typical of many, that kind of comments.


 1                            "MTS should pay their own bill,
 2                            all of it."
 3                            "I am tired of the last three
 4                            rate hikes.  I believe the
 5                            Premier should pay it
 6                            personally."
 7  55                    I guess that's relating to the fact
 8     that it was -- I think I will save that for the
 9     legislative session.
10                            "This is bordering on stupidity. 
11                            I will reduce my MTS bill by
12                            $300 because my property taxes
13                            went up that much."
14  56                    There are some other comments I don't
15     want to read here; they are not too appropriate.
16                            "You know, it is particularly
17                            bad for people on fixed income."
18  57                    One other one thinks the Premier
19     should pay the taxes.
20  58                    I could read you dozens, hundreds of
21     comments from people:
22                            "Phone bill hikes are already
23                            too frequent."
24  59                    You have to put it in the context
25     that most of these people have already seen their phone


 1     rates in some of the smaller communities more than
 2     double, local rates, over the last number of years, and
 3     even in larger centres they have seen several
 4     significant increases.  I can tell you many of these
 5     people do not benefit from any of the rate reductions
 6     in long distance; there are a lot of people who can't
 7     afford any kind of long distance, by the way, that's
 8     happened from the deregulation over the last number of
 9     years.  We run a real risk, if we have further rate
10     increases, of having many people, particularly seniors,
11     people on fixed incomes, being unable to afford phone
12     service.  This is the kind of frustration we are
13     hearing from people.
14  60                    I want to just conclude on a couple
15     of things.  I think I have given you a flavour of the
16     response of many people.  Whether they be the rural
17     municipalities, towns and cities, Northern Affairs
18     communities and reserves, I have many individual
19     comments here, but what I want to suggest to you is
20     that when you are looking at MTS' application, when MTS
21     was privatized the expectation was given by the
22     Premier -- and this is an expectation that the
23     shareholders clearly should have understood -- that the
24     kind of process we are seeing right now, this kind of
25     application, would not be the case.  I can show you in


 1     the Legislature where those comments were made.
 2  61                    When shareholders bought shares in
 3     MTS they knew what the risks were, and quite frankly
 4     they have done quite well in terms of the bottom line
 5     because of the rate increases that had already been
 6     approved.  I note for example from the third quarter
 7     report -- and I won't go into details because you will
 8     have this information available, but I think members of
 9     the audience here, the presenters, should know that in
10     the last report, the third quarter report, the net
11     income was $23.4 million, up 10.9 per cent from the
12     third quarter of 1997.  MTS is already benefitting from
13     those rates.
14  62                    Quite frankly, when MTS has suggested
15     in their application that they are somehow doing people
16     a favour by phasing in these rates, I can tell you no
17     one thinks it is any kind of favour at all to have a 40
18     per cent rate increase phased in or brought in
19     immediately.  They don't see those kind of increases as
20     being fair.
21  63                    The shareholders knew what they were
22     buying, statements were made very clearly at the time. 
23     I think they have to accept some element of the risk. 
24     MTS profits are already up significantly from when it
25     was in public ownership, largely because of the rate


 1     increases.  I believe that there is no justification
 2     for this 40 per cent rate increase.
 3  64                    I want to stress again that we are
 4     talking about the shareholders -- I believe 70 or 80
 5     per cent of the shares are owned out of province, by
 6     the way, mostly institutional investors and large
 7     investors on Bay Street.  We are not talking about a
 8     company that's widely held within Manitoba; we lost
 9     control within about a week of it being sold off. 
10     These are people who invest on a regular basis, they
11     know the kind of risks they face.
12  65                    What I am asking on behalf of these
13     many municipal councils and many Manitobans is, just
14     simply say to MTS -- the shareholders knew the risks
15     they were going to take when they purchased the shares,
16     MTS has received a number of rate increases already,
17     their profit picture is a good one for the investors;
18     in terms of the impact of the proposed rate increases
19     it would move Manitobans in many cases to the higher
20     levels of rates.
21  66                    I would ask the CRTC to do what I
22     would say most Manitobans want and just say, in this
23     particular case, to MTS, "You knew what you were
24     getting into.  Pay your own taxes.  Don't expect the
25     people of the province to pay those taxes for you."


 1  67                    Thank you.
 2  68                    THE CHAIRPERSON:  Thank you very
 3     much, Mr. Ashton.  Because you represent quite a lot of
 4     people, probably most of Manitoba there -- you read off
 5     the names of those towns and communities -- I gave you
 6     a little leeway on the time, and I think in the
 7     interest of moving along and hearing from everybody we
 8     will just move to the next presenter.
 9  69                    MR. ASHTON:  Thanks very much.
10  70                    THE CHAIRPERSON:  Thank you.
11  71                    MR. ASHTON:  I will provide copies of
12     all the resolutions.
13  72                    THE CHAIRPERSON:  Good, and to MTS as
14     well, if you could, please.
15  73                    Mr. Krushen.
16  74                    MR. KRUSHEN:  Thank you, Commissioner
17     Colville.
18  75                    Our next presenter is Ms Gloria
19     Desorcy.
20  76                    THE CHAIRPERSON:  Good morning.
22  77                    MS DESORCY:  Good morning and welcome
23     to Manitoba.  My name is Gloria Desorcy and I would
24     like to thank you, first of all, for the opportunity to
25     have this in-person meeting on this important topic


 1     today.
 2  78                    Although I work for the Manitoba
 3     Branch of the Consumers' Association of Canada, I am
 4     not here to speak on behalf of CAC this morning.  I am
 5     here to speak on my own behalf as an MTS residential
 6     subscriber.
 7  79                    My work puts me in contact with
 8     Manitobans from many walks of life and many parts of
 9     the province.  During the last few months one topic
10     that seems to be on everyone's mind is MTS' proposal
11     to, once again, raise local residential phone rates.
12  80                    Usually, on every given subject, my
13     job can be counted on to expose me to the entire gamut
14     of public opinion in about the course of a month.  On
15     the subject of this proposed rate increase, however, I
16     am greeted over and over again with one emphatic and
17     unwavering response:  "I don't want to pay it ahead of
18     time and I don't want to pay at all."  As an MTS
19     subscriber, I echo that sentiment.
20  81                    Why not pay ahead of time?  MTS makes
21     this sound like the rational choice, but there are a
22     couple of points the company conveniently doesn't
23     mention.
24  82                    Right now MTS' income tax is being
25     covered by some additional tax deductions relating to


 1     pre-privatization pension funds.  If the corporation
 2     increases its revenue by pre-collecting for income tax,
 3     it is going to use up those tax deductions faster, and
 4     we, residential consumers, will have to pay its income
 5     tax sooner.
 6  83                    Secondly, 2001 is still pretty far
 7     away.  How do we know how much income tax MTS will
 8     really have to pay?  How do I know I will still be
 9     living in Manitoba by then?  How do I know I will still
10     be an MTS subscriber by then?  After all, local
11     telephone competition is possible now.
12  84                    This brings me to the next point: 
13     freedom of choice.  If I prepay MTS' income tax for the
14     next three years, I will have to forfeit something like
15     $115 if I move away or switch to a competitor. 
16     Suddenly, the right to choose costs me money.  If I
17     chose, I could invest my heard-earned dollars for the
18     next three years instead and get a much better rate of
19     return than I would get from MTS.
20  85                    MTS claims that a $4.80 increase in
21     2001 is better for consumers than a $7.43 increase in
22     the same year, but this statement ignores the two
23     previous years of prepayment.  If I add $1.60 times 12
24     months which I will have to pay in 1999, $3.20 times 12
25     months which I will have to pay in 2000, plus $4.80


 1     times 12 months which I will pay in 2001, then I find
 2     that by the end of 2001 I have paid $115.20 of MTS'
 3     income tax.  Now, compare that to paying the $7.43
 4     cents times 12 months, by the end of 2001 I have only
 5     paid $89.16.  Prepayment doesn't amount to a saving per
 6     subscriber; in fact, the prepayment plan means I pay
 7     $26.04 more by the end of 2001.
 8  86                    Finally, why should I pay this bill
 9     ahead of time when I pay every other utility after the
10     cost is incurred?  Could this set a dangerous
11     precedent?  For instance, is Winnipeg Hydro going to
12     start charging me ahead of time because they need a new
13     computer system or because their property tax goes up?
14  87                    Having said that I don't want to
15     prepay, should I have to pay an extra $8.95 a month
16     over two years beginning in 2001?  Of course, the
17     answer to this question is another resounding and
18     emphatic "no".  If I do some quick math I realize that,
19     out of twenty-six dollars and some per month that I
20     could be paying by 2001 or 2002, $8.95, or roughly 34
21     per cent of it, will be for income tax.  I don't even
22     pay that much tax on my own income.
23  88                    MTS must gain revenue from other
24     sectors of its utility.  Why are they not paying their
25     share of the tax?


 1  89                    Premier Filmon assured Manitobans
 2     that MTS would cover the cost of income tax by
 3     operating more efficiently.  Surely this increased
 4     efficiency can be counted on to cover at least a
 5     portion of the $8.95.  It defies common sense that
 6     telephone rates in Manitoba would rise to second
 7     highest in the country when the cost of living in
 8     Manitoba is not nearly second highest in the country
 9     and when other companies like NBTel and Bell, who
10     already have income tax costs included in their rates,
11     are only charging $20.70 per month for local
12     residential phone.
13  90                    Most importantly, residential local
14     telephone ratepayers like me are protected from large
15     increases like this by price caps.  Price caps were
16     supposed to be our assurance that privatization and
17     competition would not make basic local phone service
18     unaffordable and that costs wouldn't be dumped on
19     residential consumers alone.  Price caps were supposed
20     to be our assurance that local residential rates would
21     not go up more than 10 per cent of the overall rate per
22     month in one year.  If this is true, then why do I, as
23     a residential consumer, somehow feel betrayed?
24  91                    I feel betrayed because I was
25     promised that the privatization of MTS would not


 1     increase rates but local phone rates have not stopped
 2     going up since privatization.  Now MTS is telling me
 3     that I have not yet begun to pay the cost of
 4     privatization, and when I do pay it, it is going to
 5     cost me $8.95 a month, or $8.00 over five years if I
 6     prepay.
 7  92                    I feel betrayed because I was
 8     promised that MTS would look to internal cost-cutting
 9     measures to pay its income tax, but MTS is not looking
10     any farther than the phone bills of its residential
11     customers and it wants to start collecting my money two
12     or three years before the bill is due.
13  93                    Finally, the ultimate betrayal, I
14     believed that price caps would protect me from large
15     and unreasonable rate increases, but one year into
16     price caps Manitobans are faced with a "humongous" rate
17     increase.  One year into price caps MTS is telling us
18     that this rate increase is different, that we have
19     already run into an exception to the rule.  One year
20     into price caps MTS is telling us we only have two
21     choices:  a rate increase of nearly 49 per cent over
22     two years or a prepaid increase of close to 44 per cent
23     over five years.  Neither of these options is
24     acceptable.
25  94                    I have been doing some surfing on the


 1     Internet lately and I came across some interesting
 2     reading on the CRTC website.  I am not just saying that
 3     to be nice, it was interesting.  The Stentor Quarterly
 4     Monitoring Report lists telephone penetrations for low
 5     income households by province.  In May of this year,
 6     Manitoba had the lowest percentage of low income
 7     households with phones in Canada.  This percentage has
 8     gone down more than two points since November of last
 9     year.  It would be interesting to correlate the
10     decrease in percentage of low income households having
11     phones with the ever-increasing local residential
12     telephone rates.
13  95                    As a society, do we, North Americans,
14     not consider basic telephone service a necessity?  I
15     believe that we do.  Yet I am sure that every person in
16     this room knows someone who can't afford a telephone or
17     perhaps can't afford a telephone themselves.  Do we
18     stop to think how difficult it is to do simple things
19     like apply for a job without a telephone, not to
20     mention accessing emergency services or keeping in
21     touch with family and friends.  Are these Manitobans
22     who struggle to stretch their budgets each time phone
23     rates go up not among the very individuals that price
24     caps were supposed to protect?  Isn't the protection of
25     all captive residential ratepayers the true spirit of


 1     the Price Cap Decision?
 2  96                    I am here today to ask you, the CRTC,
 3     to uphold the spirit of the Price Cap Decision.  I urge
 4     you to disallow MTS' request for a prepaid rate
 5     increase, not to accept the assumption that residential
 6     subscribers should pay the whole cost of MTS' income
 7     tax.  I urge you to look for another solution, one that
 8     is more equitable and reasonable for all Manitobans and
 9     one that is in keeping with the principles of fairness,
10     affordability and accessibility.
11  97                    Thank you.
12  98                    THE CHAIRPERSON:  Thank you very
13     much, Ms Desorcy.  I have heard of exogenous factors in
14     price cap formulas and I guess we are going to have to
15     add a "humongous" factor to our price cap formula.
16  99                    Thanks again for your presentation.
17  100                    MS DESORCY:  Thank you.
18  101                    THE CHAIRPERSON:  Mr. Krushen.
19  102                    MR. KRUSHEN:  Thank you, Commissioner
20     Colville.
21  103                    I would now like to call Mr. Charles
22     Cruden.
23  104                    THE CHAIRPERSON:  Good morning,
24     Mr. Cruden.


 1  105                    MR. CRUDEN:  Good  morning.  My name
 2     is Charles Cruden and I would like to give you a
 3     special welcome and thank you to the Commission for
 4     coming this morning.  I know that Manitoba is not a
 5     particularly inviting vacation spot in November, but I
 6     hope the warmth of our welcome will make up for the
 7     weather outside.
 8  106                    As we all know, there are two things
 9     which we have to come to expect in life:  death and
10     taxes.  But just because we expect them, it doesn't
11     mean that we want them, especially if it means having
12     to deal with them before their time.  That essentially
13     is the issue before you today.
14  107                    While I usually wear the hat of
15     Executive Member on the Board of Directors of the
16     Manitoba Society of Seniors, or MSOS, today I am only
17     wearing the hat of Charles Cruden.  I am an individual
18     who is here to express my own views on a subject which
19     I consider very important.
20  108                    I am involved with a number of older
21     individuals on a regular basis.  To these people, the
22     phone means so much more than to you or to me.  This is
23     because the difference to them between having a phone
24     and not having one could literally mean the difference
25     between life and death.


 1  109                    In the 1990s local telephone service
 2     is something that we all expect and depend on.  It is
 3     so important that it can no longer be viewed as a
 4     luxury.  All individuals rely on the phone to
 5     communicate with the community, friends and emergency
 6     medical or police aid.  For seniors in particular,
 7     though, the local telephone system is indeed a
 8     lifeline.
 9  110                    For shut-ins, the telephone is an
10     essential part of maintaining a decent and enjoyable
11     standard of living.  This is especially true with the
12     advancement of e-mail and Internet technology over the
13     past few years.  We are now able to do many everyday
14     functions through the Internet such as banking and
15     shopping.  With the perpetual downsizing of many
16     businesses and financial institutions, it might not be
17     long before we need a phone to do even the most basic
18     transactions.
19  111                    More importantly, though, in a
20     society where the sense of community is no longer what
21     it once was, the phone is now a key tool for seniors to
22     keep in touch with those who are closest to them. 
23     Seniors, as well as everyone else in Canada, have come
24     to rely upon this essential service.  We consider it a
25     basic right to have such a service in our homes.  No


 1     one in their right mind would try to tell a low income
 2     senior that they should not have a phone in their house
 3     or apartment.  Yet, that seems to be the message that
 4     MTS is sending.
 5  112                    Basic local rates have risen rapidly
 6     in the past few years.  Residential consumers have
 7     faced an increase of approximately $5 per month just to
 8     be able to have a phone in their home.  MTS is now
 9     recommending that, in the next few years, this cost
10     increase another $8 a month.  It is not too far in the
11     past that I can remember paying only $13 per month for
12     basic services; now we are looking at a cost that is
13     almost twice that amount.  I am not sure that there is
14     anything else around, and definitely no other public
15     utility, which has increased in cost by nearly 100 per
16     cent in under 10 years.
17  113                    This cost is not only unfair because
18     of its size, it is also unfair because residential
19     subscribers will have to bear most, if not all, of the
20     cost.  There is a good chance that local businesses
21     will not pay anything towards this increase, and this,
22     even though they are consumers just as much as the
23     residential individuals who are being hit with the
24     expense.  How could one specific section of the
25     consumer group be allowed to slip out of having to pay


 1     an increase in rates, and why does MTS need the
 2     authority to place the entire burden of the utility's
 3     income tax on the shoulders of the residential
 4     subscribers?
 5  114                    Though such an increase may not seem
 6     like an outrageous amount to some people, it definitely
 7     puts a squeeze on seniors.  Many of us are already
 8     under the poverty line and experiencing difficulty
 9     supporting ourselves in today's world.  To make us pay
10     an extra $100 a year is something we just can't afford.
11  115                    For seniors who were part of an age
12     where the average salary wasn't what it is now, our
13     pensions are much smaller than what people working
14     today are expecting to receive.  As well, our
15     retirement incomes are not increasing at the rate that
16     working individual salaries are.  We are forced to
17     budget our lives around a monthly income that, for some
18     people, was set 20 years ago.  Throw in the fact that
19     there are many people, like myself, who do not even
20     have a pension and you might be able to understand why
21     $100 a year is quite a bit of money.  For some low
22     income seniors, then, an extra $8 a month could mean
23     sacrificing some basic necessity or giving up the phone
24     in their home.
25  116                    It is important to remember that we


 1     are not talking about a luxury here either.  We are not
 2     complaining about not being able to watch "Matlock" at
 3     all hours of the day because we cannot afford an
 4     increase in the television cable rate, nor are we
 5     insisting that we have a right to have the invisible
 6     answering machine feature.  An increase in either of
 7     these rates might be acceptable.  Neither is a
 8     necessity, and we have the option as to whether or not
 9     we want that extra service.
10  117                    Local basic service, however, is a
11     service that seniors have come to rely on for their
12     everyday needs.  For some seniors there is no other way
13     to get in contact with the doctor in an emergency or to
14     order basic medication.  It seems greatly unfair that
15     for something such as long distance, something which
16     any individual in Winnipeg may choose to use or not to
17     use, the cost has come down so much that the monthly
18     rate is now less than what the basic MTS service will
19     be if this rate increase is approved.
20  118                    The ability to get in contact with a
21     local doctor in emergencies seems to have been given
22     less importance than being able to phone someone in
23     Vancouver to talk about the weather.  The health and
24     welfare of seniors is being compromised because our
25     communication lifeline is slowly being eaten away by


 1     these increasing costs.
 2  119                    As seniors we are also concerned that
 3     this increase represents a cost which has not yet
 4     arisen.  As well, it is also highly speculative as to
 5     exactly what that cost will be.  What is being asked is
 6     that individuals pay now for an expense which they may
 7     never experience as a consumer.  With the entrance of
 8     local competition in the next few years many consumers
 9     may have left MTS or even the region entirely before
10     this cost is being incurred.
11  120                    In the case of seniors, there is also
12     the very real possibility that certain individuals may
13     literally disconnect with MTS and take up with that big
14     telephone company in the sky.  As far as I know, there
15     is a monopoly on telephone service up there, and I
16     don't think MTS will get that contract, although with
17     the $8 rate increase MTS may have guaranteed themselves
18     a contract in the world of a certain pointy-tailed,
19     pitch-forked wielding individual who lives in a warmer
20     climate.
21  121                    As morbid as this issue may be, it is
22     a reality.  According to Statistics Canada, almost
23     10,000 adult Manitobans pass on each year.  Life
24     insurance companies adjust their policy rates and pay-
25     out schedules for seniors specifically for this reason. 


 1     Yet, MTS feels that it is more important to extract
 2     money from seniors now, even if they are not here to
 3     enjoy the benefits of what they have paid for.
 4  122                    It is for this reason that I don't
 5     put the money down today for a new car that I would not
 6     get possession of until the year 2001.  What's the
 7     point of spending the little money that I have now on
 8     something that I may never benefit from?  This is why,
 9     as seniors, we are more inclined to keep our money now
10     and pay when we actually have to pay.
11  123                    If I know that a big hit is coming
12     and that it is justified, I can prepare myself for it
13     and I can budget for it.  If this involves paying in
14     one big lump sum or paying gradually afterwards, so be
15     it.  The fact is that it is my money.  I want to be
16     able to use it as I choose for expenses that actually
17     exist.  I do not have a problem with paying for
18     services that I actually receive.  I value what MTS has
19     to offer me, but just because I have a need for such a
20     service, please do not think that MTS, as my local
21     service provider, can take advantage of me for costs
22     which are not yet justified.
23  124                    I would also prefer to have the right
24     to decide who I give my money to.  If MTS is not using
25     this money now, then why should they be able to gain


 1     interest on money that really belongs to me and on
 2     which I could be collecting my own interest?  MTS is
 3     not my first choice as a savings institution,
 4     especially if its guaranteed return on my money is less
 5     than 5 per cent instead of the 10 or 11 per cent that
 6     is being offered to shareholders.
 7  125                    I would like to thank you again for
 8     the opportunity to make this presentation and I hope
 9     that I have been able to make you appreciate what we as
10     seniors face with the proposed MTS rate increase.
11  126                    THE CHAIRPERSON:  Thank you very much
12     for your presentation.
13  127                    I hope it won't alarm you to learn
14     that in a recent Toronto newspaper I personally have
15     been characterized as that pointy-tailed, pitch-forked
16     individual, but we won't be considering this
17     application in that light.
18  128                    Thank you very much.
19  129                    MR. CRUDEN:  Thank you.
20  130                    THE CHAIRPERSON:  Mr. Krushen.
21  131                    MR. KRUSHEN:  Thank you, Commissioner
22     Colville.
23  132                    I would now like to call Ms Carol
24     Loveridge of the Canadian Association of the Non-
25     Employed.


 2  133                    MS LOVERIDGE:  Good morning.  I am
 3     here representing the Canadian Association of the Non-
 4     Employed.  You will have to excuse me, I just got a
 5     slight cold unexpectedly.
 6  134                    We are a Canada-wide organization and
 7     we represent people who are living on fixed income --
 8     students, non-employed, under-employed, part-time
 9     workers.
10  135                    Almost everyone I think needs the
11     telephone and everyone today would say that the
12     telephone is a necessity.  I don't think anyone would
13     argue with that point.  Some members of our community,
14     such as the elderly, the sick, the disabled, and
15     families of young children are particularly vulnerable
16     and need to be able to contact help if necessary. 
17     However, everyone relies on the telephone for help and
18     safety reasons.  For people who are non-employed and
19     looking for work, the telephone is particularly
20     important.  The telephone is needed to contact and be
21     contacted by employers.  Today we have a highly
22     competitive job market.  If a job seeker does not have
23     a telephone number to place on an application form,
24     their chances of success are reduced.
25  136                    Although there are many important


 1     reasons why every household needs a telephone, many
 2     people today are not able to afford telephone service. 
 3     For example, in Manitoba people on city and provincial
 4     welfare are not given money for a telephone.  Money for
 5     a telephone is not included in that budget.
 6  137                    So where do people take that money
 7     from?  They have to make a choice because it is a
 8     necessity for people to have a telephone.  So they may
 9     take the money for their telephone from food or their
10     clothing budget.  They may take the money from items
11     that you and I would have no second thought about going
12     out and buying.  If we wanted to buy a new pair of
13     mitts for our kids or a new pair of boots, we don't
14     necessarily have to think about "Wait a minute.  Wait a
15     minute.  If I do that, I can't pay my telephone bill."
16  138                    It appears that communication
17     technology is advancing at a very tremendous rate. 
18     Surely, with the advances in technology, basic
19     telephone service should be getting more affordable,
20     not more expensive.  Isn't this what we are always
21     told?  For some reason, here in Manitoba the opposite
22     has happened.
23  139                    One of the reasons that we strongly
24     object to the rate increase is that people on low
25     income trying to support their families cannot sustain


 1     a 40 per cent increase in cost, and particularly we
 2     object to the fact that this rate increase is being
 3     asked for something that may not even happen.  Never
 4     mind the fact that we are being asked to prepay MTS'
 5     income tax -- that's ludicrous -- what if it doesn't
 6     happen at all?  What if the bill does not materialize? 
 7     Will Manitobans receive a refund of their payment?  I
 8     don't think so.  I certainly have no confidence that
 9     that would happen.  For example, if the tax bill didn't
10     arrive, would we get this money back we have prepaid? 
11     I don't think anyone believes that we would.
12  140                    I think, from what I can read in the
13     MTS application, there is no justification for this
14     increase.  It is an unfair increase, it is unfair to
15     burden Manitoba consumers with this increase and
16     particularly low income people.  For example, if you
17     are a single person and your EI has run out and you are
18     now living on welfare while you are trying to look for
19     a job, your telephone bill is 11 per cent of your
20     income.  That is an enormous percentage.
21  141                    Now, MTS also claims that their five-
22     year plan is the best interest of consumers.  Well, I
23     don't believe that at all.  I think we as consumers,
24     and particularly people on low income, can decide what
25     is in our best interest.  It is not in our best


 1     interest to absorb a 40 per cent increase in rate for a
 2     tax bill that may not come.  I mean, this doesn't even
 3     make sense when you say it, never mind when we are
 4     being charged it.
 5  142                    Now, I want to return to something
 6     that Mr. Ashton brought up, and this is a little bit of
 7     the historic and the accountability of the
 8     privatization of MTS.
 9  143                    The majority of Manitobans fought
10     long and hard against privatization because we feared
11     jobs would be lost and fees would go up.  However, both
12     MTS and the Manitoba government ignored the will of the
13     people and privatized MTS.  At that time both the
14     government and MTS promised Manitobans two things:  no
15     jobs would be lost and there would be no rate increases
16     in basic service.  Within three months of privatization
17     170 people lost their job, and here we are not quite
18     two years later fighting against an unfair and
19     unjustified increase.
20  144                    MTS has reneged on its promise to
21     Manitobans.  We are asking the CRTC to hold MTS
22     accountable to its promise to us to respect and honour
23     the needs of the many and not the wants of the few.  We
24     are asking, please, do not approve this rate increase,
25     particularly difficult for people on fixed or limited


 1     income.
 2  145                    Thank you.
 3  146                    THE CHAIRPERSON:  Thank you very
 4     much, Ms Loveridge.
 5  147                    Mr. Krushen.
 6  148                    MR. KRUSHEN:  Thank you, Commissioner
 7     Colville.
 8  149                    I would now like to call Mr. David
 9     Martin of the Manitoba League of Persons with
10     Disabilities.
11  150                    Mr. Martin.
12  151                    THE CHAIRPERSON:  Good morning,
13     Mr. Martin.
15  152                    MR. MARTIN:  Good morning. Thank you
16     very much for the opportunity to be here.
17  153                    I would like to introduce Cindy
18     Isles, who is the Chairperson of our organization. 
19     Cindy comes from The Pas.  I didn't know she would be
20     in town, actually, but she was in town.  I thought it
21     might be helpful for her to come as well, so she is
22     going to do part of the presentation with me.
23  154                    MS ISLES:  Thank you very much, Dave. 
24     I will just share your mic, it might be easier that
25     way.


 1  155                    As Dave mentioned, I am from The Pas,
 2     Manitoba, and I would like to say welcome to Manitoba
 3     on behalf of the northern communities as well as from
 4     Manitoba League of Persons with Disabilities.  I will
 5     keep it fairly brief because I am not even supposed to
 6     be here; I will just mention some of what Dave was
 7     going to say and keep it simple.
 8  156                    The Manitoba League of Persons with
 9     Disabilities Incorporated is an organization of
10     individuals with all types of disabilities.  We were
11     formed in 1974 to be a voice expressing needs and
12     concerns of persons with disabilities who live in the
13     province of Manitoba.
14  157                    Over the past 24 years -- our
15     anniversary is next year; in 1999, it will be 25 years
16     that we have been involved here -- we have been
17     actively involved in social policy development in such
18     areas as accessibility to public buildings, the rights
19     of children with disabilities to receive an inclusive
20     education, the provision of home care services
21     throughout Manitoba and the development of accessible
22     transportation systems such as Handi-Transit for people
23     with disabilities.
24  158                    Through our history the MLPD has been
25     concerned about access to convenient and affordable


 1     telecommunications services.  From time to time we have
 2     worked closely with MTS to address issues affecting
 3     affordability and usability of Manitoba's telephone
 4     system for people with disabilities.  The MLPD has
 5     provided advice to MTS and telephone system regulators
 6     on such issues as the development of message relay
 7     services to facilitate communications between deaf and
 8     hearing individuals, the price of specialized telephone
 9     equipment, the creation of MTS Special Needs Centre and
10     issues evolving around the placement of public
11     telephone TTYs for the deaf Manitobans.
12  159                    The MLPD has about 200 individual
13     members who come from across Manitoba.  We also
14     represent four branches which are located in Steinbach,
15     Souris, The Pas and Thompson.  The MLPD is a member of
16     the Council of Canadians with Disabilities as well.
17  160                    I will turn the mic over to Dave.  He
18     is a much better public speaker.  I will let him
19     continue from there.
20  161                    MR. MARTIN:  Thank you very much.
21  162                    It is the MLPD's understanding that
22     MTS is seeking permission to raise monthly residential
23     rates by $8.  We understand that this rate increase
24     would be phased in over a period of five years.  The
25     MLPD is very concerned about this proposed rate


 1     increase because we believe it will have a significant
 2     negative impact on people with disabilities.
 3  163                    In 1991 something called the Health
 4     and Activity Limitation Survey was done by Statistics
 5     Canada as part of the Canadian Census.  That survey
 6     found that there were 160,685 Manitobans who identified
 7     themselves as having a disability.  Of this total
 8     amount, the HAL Survey found that 76,820 Manitobans
 9     with disabilities indicated that their annual income
10     was less than $15,000.  The MLPD believes this
11     information has changed very little in the past few
12     years.
13  164                    It is also widely accepted that
14     people with disabilities have many extra costs which
15     are a direct result of their disability.  Our cost of
16     living is higher and yet we often need to make do with
17     much lower incomes and restricted earning potential.
18  165                    It is clear that a large number of
19     Manitobans with disabilities live in poverty.  Many
20     live on fixed incomes, and these incomes would not
21     necessarily increase to accommodate an $8 per month
22     telephone bill increase.  In fact, our members tell us
23     that they have real difficulty paying for their current
24     telephone bills, let alone pay for higher bills.
25  166                    For most people with disabilities the


 1     telephone is not a luxury which they can choose to live
 2     without.  Many of us require telephones for security
 3     reasons as part of our desire to live independently in
 4     the community.  For us, we use telephones to call for 
 5     Winnipeg's Handi-Transit service; in order to book that
 6     service and use it you have to phone in to book your
 7     ride and then you have to phone back another day to
 8     confirm your ride.  We use telephones to order
 9     groceries and medications if we have difficulty going
10     out and we use telephones to arrange for home care
11     services to get out of bed.  We use telephones to call
12     for emergency assistance if we are alone and need help
13     when home care services are not scheduled.  Also, many
14     mobility-disabled individuals simply need a telephone
15     to maintain contact with friends and family because
16     going out sometimes can be difficult.
17  167                    Our main point is that most people
18     with disabilities cannot cancel their telephone if the 
19     price becomes too high.  In many ways, people with
20     disabilities are a captive market for the telephone
21     system and will maintain this service regardless of the
22     price because they simply have no other choice.  They
23     will purchase less clothing, medications and even food
24     in order to continue to have a telephone.  If approved,
25     the MTS rate increase would be unfair to people with


 1     disabilities because many of us have very limited
 2     incomes and will be forced to sacrifice other
 3     legitimate needs in order to pay for the higher
 4     telephone bills.
 5  168                    MS ISLES:  Dave asked me to just give
 6     you our simple conclusion on this.
 7  169                    The MLPD urges the CRTC to decline
 8     the MTS rate increase.  Instead, we propose that MTS be
 9     directed to find alternatives for dealing with the
10     future tax expenses which they will be required to pay
11     in a few years.  For instance, they might increase
12     charges to businesses or perhaps increase charges for
13     additional services like call waiting, caller
14     identification, et cetera.  We urge the CRTC to ask MTS
15     to use the next couple of years to find alternative
16     solutions and we ask that people with disabilities be
17     consulted by MTS.
18  170                    Thank you very much for listening to
19     our presentation.
20  171                    THE CHAIRPERSON:  Thank you,
21     Ms Isles.  In spite of your comment that Mr. Martin is
22     a better public speaker, I think you both did a great
23     job in presenting your case here this morning.
24  172                    MS ISLES:  Thank you.
25  173                    THE CHAIRPERSON:  Thank you very


 1     much.
 2  174                    Mr. Krushen.
 3  175                    MR. KRUSHEN:  Thank you, Commissioner
 4     Colville.
 5  176                    I would now like to call Mr. Byron
 6     Williams of the Public Interest Law Centre on behalf of
 7     CAC and the MSOS.
 8  177                    MR. WILLIAMS:  Good morning,
 9     Mr. Chairman and Members of the Panel.
10  178                    THE CHAIRPERSON:  Good morning.
12  179                    MR. WILLIAMS:  On behalf of the
13     Consumers' Association of Canada, the Manitoba Branch,
14     and the Manitoba Society of Seniors, I would like to
15     give you a special warm welcome to Manitoba today. 
16     They asked me to pass on a special thank you for coming
17     to visit us in Winnipeg and to hear the views of
18     Manitobans in person on an issue which they consider
19     very important.
20  180                    As I look around the room I think we
21     can all agree that, with the number of registered
22     presenters and the crowd that we have here today, it
23     speaks volumes about the strong feelings that
24     Manitobans have about this issue, the issue surrounding
25     MTS and the massive rate increase that's being


 1     proposed.  I am sure one of the reasons Manitobans do
 2     have strong feelings about MTS is related to the
 3     controversy surrounding privatization.
 4  181                    I don't intend to get into the merits
 5     of that debate this morning, but as you embark on this
 6     difficult decision you face I think it would be helpful
 7     to look at where MTS has been, where it is today, where
 8     it is going, and the role that utility segment income
 9     taxes, when they are actually incurred, will play in
10     MTS' transition from a Crown corporation to a private
11     sector company, because when MTS actually incurs income
12     taxes on its utility segment it will have made that
13     final step away from the somewhat sheltered world of a
14     Crown corporation to a private sector company.  It will
15     become a private sector company fully, competing on a
16     level playing field with other private sector companies
17     who also have to incur income taxes.
18  182                    I can understand the trepidation MTS
19     might feel as it is taking that last step away from the
20     gentle cocoon of Crown ownership and entering the less
21     forgiving embrace of the free market, but let's be
22     clear about one thing: it is absolutely and
23     fundamentally wrong for MTS to suggest that it will be
24     at a competitive disadvantage because it will be
25     incurring utility segment income tax at some time in


 1     the future.  The reality is that for the first time
 2     since MTS became a Crown corporation it will be
 3     competing on a level playing field.
 4  183                    MTS often talks about how it operates
 5     a world class fibre optic, fully digital, provincial-
 6     wide telecommunications system.  It is proud of that
 7     fact, and so it should be.  But it should be recognized
 8     that the modern infrastructure on which MTS has been
 9     built, that backbone was built in large part based upon
10     its advantages as a Crown corporation, the fact it had
11     a lower cost of capital because it needed very little
12     equity and the fact it was subsidized with government-
13     guaranteed debt, and of course the fact that it never
14     incurred corporate income tax.  No private sector
15     company had those advantages.  And think of the
16     advantages even today that the absence of corporate
17     income tax gives MTS thanks to the additional tax
18     deductions stemming from the pre-privatization pension
19     plan; MTS currently faces one less significant cost
20     than its competitors.
21  184                    This MTS tax advantage can be
22     reflected in various ways in its rates and its
23     revenues.  First, it could charge the same as its
24     competitors and earn a higher return because it has
25     lower costs.  Secondly, it could charge less than its


 1     competitors in order to buy market share and still earn
 2     the same return because its costs are lower due to the
 3     tax advantage.  Third, the competitive advantage
 4     created by the lack of taxes, the lack of tax expense,
 5     might be cancelled out due to internal inefficiency.
 6  185                    Currently MTS enjoys an undeniable
 7     advantage, but the time is coming when it will incur
 8     income tax and be obliged to play on a level playing
 9     field.  I can understand how the thought of losing that
10     advantage might be painful to MTS.  I can also
11     understand, if I put myself in their shoes, why it
12     might want to prolong that advantage so that, instead
13     of having to recover its full income tax costs from its
14     rates in the year 2001, it might prefer to put that
15     date off for a couple of years to, say, 2003.
16  186                    In other words, if I were MTS, I
17     would like a proposal where I only had to recover $27
18     million in rates from my utility segment income tax in
19     the year 2001 rather than my full cost of $40 million,
20     and I would really like a proposal where I only had to
21     recover $35 million in rates for income tax in 2002
22     rather than my full cost of $42 million.  If I were
23     MTS, I would like that extra cushion because I would be
24     prolonging my competitive advantage at the very time
25     when local competition is expected to be gaining


 1     momentum.  And I would especially like that option if I
 2     could be guaranteed that I would get that extra
 3     cushion, that competitive war chest, by pre-collecting
 4     part of it in 1999 and the year 2000, years when local
 5     competition will be in its infancy.
 6  187                    So, if I were MTS, I would be
 7     prepared to give up a bit of my advantage in 1999 and
 8     2000 to prolong it for a couple of years, and if I were
 9     MTS, it would be even better, rather than recovering my
10     future income tax costs which are generated from the
11     entire utility services from all utility services, if I
12     could pre-recover them from one or two services,
13     services where subscribers don't have a reasonable
14     opportunity or expectation for competition in the first
15     couple of years, 1999 and 2000, services such as basic
16     rates.
17  188                    If I were MTS, I think the best way
18     to make the transition to the real world pain free
19     would be to transfer all that pain to captive
20     residential subscribers.  That would be the perfect
21     scenario.  I would prolong my advantage over time and I
22     would dump all my future income tax costs on those
23     subscribers with the least prospect for competitive
24     relief.  This would be perfect because, if I were well
25     run, I could either generate higher returns by charging


 1     the same rates as my struggling competitors or buy
 2     market share by charging lower rates.  And, even if I
 3     wasn't efficient, or as efficient as my private sector
 4     brothers and sisters, I would still have the luxury of
 5     a couple more years of competitive returns while I
 6     tried to get my house in order.
 7  189                    But I am not MTS, nor are my clients,
 8     and MTS has to recognize that what might look really
 9     good from a company perspective might not look nearly
10     as good from the perspective of a regulator or a
11     residential subscriber, and it especially wouldn't look
12     good in an era of price cap and local competition, an
13     era where the rewards are supposed to go to efficient
14     companies, where competition is supposed to be on a
15     level playing field and where residential subscribers
16     are supposed to be shielded against being unfairly
17     loaded with costs, like companies gearing up for local
18     competition.
19  190                    If the utility segment of MTS is
20     facing a new cost, the letter, spirit and intent of
21     price cap suggest that that cost should be borne across
22     all services at the level of the price cap index, not
23     downloaded onto the backs of local residential
24     subscribers in the sub-basket.
25  191                    If MTS truly feels that it cannot


 1     recover its future income tax costs in a competitive
 2     market when they are actually incurred despite the fact
 3     that competitors also face the prospect of incurring
 4     income tax, the only logical, rational explanation for
 5     that is that MTS is not as well run as its competitors. 
 6     But under price caps subscribers are not supposed to
 7     bear the burden of company inefficiency.  Only when
 8     shareholders bear that consequence is there an
 9     incentive to be as efficient as possible.
10  192                    Although the MTS proposal has changed
11     somewhat over the year since the initial March 31st
12     filing, there is one constant; it is a desire to part
13     subscribers with their money sooner than it is
14     necessary so that MTS can enhance its own position and
15     fetter competition.  Customers lose on both those
16     counts:  they pre-fund MTS to help it beat competition,
17     but they are not able to enjoy the fruits of
18     competition because MTS has a competitive advantage. 
19     If price caps are to work, MTS has to play by the
20     existing rules, and those rules do not include a
21     prepayment of a forecast expense.
22  193                    I think I have a few minutes left, so
23     there is a point my client would like to emphasize
24     quite strongly, and that's that it would be unjust,
25     unfair and contrary to lawful regulatory principles to


 1     authorize the pre-collection of a forecast expense that
 2     has not been incurred.  My clients, CAC/MSOS, expect
 3     that MTS will try and smudge and confuse this issue;
 4     they will suggest an analogy to deferred costs, to
 5     deferred taxes, which of course are taxes where current
 6     accounting costs have actually been recorded.
 7  194                    With respect, that argument is a less
 8     than profound work of accounting and regulatory
 9     fiction.  That argument founders in the face of the
10     Commission's own decision and the reality that MTS does
11     not have a current income tax expense and it founders
12     in the face of the company's own admission that it is
13     trying to collect these costs before they are incurred.
14  195                    There is a fundamental regulatory
15     principle that a regulated company is only allowed a
16     reasonable opportunity to recover costs incurred in
17     providing current services.  It is a principle built
18     upon the concept of inter-generational or inter-
19     temporal equity. the commitment to efficiency and the
20     objective of regulatory certainty.  This fundamental
21     principle has been enshrined in the concept of just and
22     reasonable rates and has been affirmed by countless
23     regulators and courts over the last seven or eight
24     decades.
25  196                    MTS is asking you to violate this


 1     principle.  It is promoting a radical reinterpretation
 2     of the concept of just and reasonable rates, a concept
 3     that historically spoke to the balance between
 4     shareholders and subscribers.  In the radical
 5     interpretation suggested by MTS, this historical
 6     balancing act and those decades of jurisprudence have
 7     been swept aside.  In the MTS world view there is only
 8     one side to the equation:  the shareholders' view.
 9  197                    MTS, backed by RBC Dominion
10     Securities, is vehemently opposed to a concept it calls
11     "backloading", a concept that for decades has had
12     another name:  "rates that reflect costs when they are
13     actually incurred".  What a common sense concept --
14     paying for costs when they are incurred, just as
15     subscribers have for decades under standard regulatory
16     practice and procedure.  But to MTS and to RBC this has
17     become anathema.  Paying for costs when they are
18     actually occurred has become a confiscatory assault on
19     what they appear to regard as the only sacred
20     principle:  a guaranteed return no matter how poorly or
21     how well the company is run, a guaranteed return
22     despite the fact we are under price cap, where the
23     level of return is supposed to reflect the efficiency
24     of the company.
25  198                    Just to sum up, MTS is asking you to


 1     violate this fundamental regulatory principle, but my
 2     clients, representing many Manitoba consumers, are
 3     confident that you will reject their radical solution
 4     and retain the balance between shareholders and
 5     subscribers that the concept of just and reasonable
 6     rates is supposed to uphold.
 7  199                    Thank you very much, Mr. Chairman.
 8  200                    THE CHAIRPERSON:  Thank you,
 9     Mr. Williams.
10  201                    Mr. Krushen.
11  202                    MR. KRUSHEN:  Thank you, Commissioner
12     Colville.
13  203                    I would now like to call Ms Judy
14     Wasylycia-Leis, the Member of Parliament for Winnipeg-
15     North-Centre.
17  204                    MS WASYLYCIA-LEIS:  Thank you very,
18     very much.
19  205                    I am glad to be here as a Member of
20     Parliament for Winnipeg-North-Centre speaking on behalf
21     of constituents in my area who are very concerned about
22     the proposed increase in basic rates for MTS.  I want
23     to thank, as many have done already this morning, the
24     CRTC for agreeing to hold this daylong session here in
25     Winnipeg so that you can meet Manitobans face to face


 1     and feel the passion of concerned citizens here in
 2     Winnipeg and throughout the province.
 3  206                    So I am here to add my voice to the
 4     many Manitobans you are hearing from today who are
 5     concerned about the proposed rate increase specifically
 6     and about the direction of our telephone system
 7     generally.
 8  207                    I am here on behalf of my
 9     constituents to register our strongest possible
10     opposition to the proposed rate increase by MTS.  Parts
11     of my constituency have the highest poverty rates that
12     are anywhere in this country.  We have incredible
13     poverty, unemployment, homelessness, and I think if you
14     wanted to give a human face to the well-known fact that
15     Winnipeg is the child poverty centre of Canada, you
16     only have to walk down the streets of my constituency
17     to realize what that really means.
18  208                    Winnipeg-North-Centre has a
19     disproportionately high number of people who are on
20     fixed income and who are working and able just to eke
21     out a subsistence level existence.  I speak for all my
22     constituents but in particular for seniors, the working
23     poor, single parent mothers and many families living
24     below the poverty line.
25  209                    On their behalf I want to remind you


 1     that phones are a basic necessity, a fact that is
 2     increasingly being overlooked these days.  In the rush
 3     to become a global competitive society using
 4     deregulation and privatization at every turn, very
 5     little consideration is being given to the impact of
 6     pricing phones out of reach for a growing number of
 7     citizens.
 8  210                    In this global economy we are all
 9     aware of the growing gap between the rich and the poor,
10     and I think the issue of phones gives us an important
11     symbolism of that growing gap.  Isn't interesting that
12     we see on the one hand a number of people with the
13     ability not only to have phones in their homes but to
14     have phones growing out of their ears wherever they go,
15     yet on the other hand to have a growing number of
16     families in our society today without even basic
17     telephone service?  Telephones connect us to jobs, to
18     our families, to loved ones and to emergency services. 
19     In the lives of many, many people, the loss or the
20     absence of a phone has an impact in just plain survival
21     terms and in fact means further isolation from
22     participating in our society today.
23  211                    We already have a problem, as you
24     have heard from so many, about low income people not
25     being able to afford a phone.  Surveys on low income


 1     household penetration rates show us that Manitoba has,
 2     if not the lowest, the second lowest rate in terms of
 3     penetration anywhere in Canada with perhaps one in
 4     twelve low income households without any phones at all.
 5  212                    The proposed rate increase will kill
 6     any hope among those families of ever being able to get
 7     a phone and it will undoubtedly add more people to the
 8     rolls of those without a phone.  Is this what we want? 
 9     Do we want a society of more jobless, homeless and
10     phoneless people?
11  213                    If so many have no phones already or
12     no hope of ever getting a phone, what does it mean for
13     those who are already on very tight fixed budgets? 
14     What sacrifices will have to be made in order to pay
15     for increasing phone service?  What will this mean for
16     low and middle income families everywhere?  What will
17     they have to give up in order to retain their phones?
18  214                    As you have heard already this
19     morning, since 1995 MTS has already had several rate
20     increases adding up to approximately an additional $5
21     on the monthly phone bill.  The proposed increase in
22     basic rates could add up to another 40 per cent over
23     that amount, making the situation very difficult here
24     in Manitoba.
25  215                    The questions many are asking in my


 1     constituency and throughout Manitoba are:  Why are
 2     consumers being asked to bear the brunt of paying MTS'
 3     income taxes?  Why is there an increasing burden being
 4     placed on the residential user and not others?  Why
 5     should consumers have to start paying taxes for MTS
 6     before they are incurred based on their projections of
 7     what their taxes might be?  And why, given the
 8     profitable situation at MTS, are individuals being
 9     asked to subsidize the profits of shareholders?
10  216                    I wanted to also add too, for the
11     benefit of the Members of the CRTC, that five years
12     ago, on June 7th, 1993, David Orlikow, the former
13     member for Winnipeg-North, a person you may recall as
14     someone who fought vigilantly and diligently for
15     fairness for all citizens, particularly when it came to
16     telephones and telecommunications -- he helped me make
17     an appearance before the Public Utilities Board when we
18     were dealing with that difficult issue of deregulation
19     and particularly the costs that MTS was being required
20     to pick up as a result of the Unitel hook-up costs.
21  217                    That year, 1993, probably, looking
22     back, marked the beginning of the end for our notion of
23     a universal phone service.  We said at that time that
24     Manitoba and Canada fought for, and enjoyed, one of the
25     best telephone systems in the world and we said that


 1     the Canadian advantage that we had in pricing and
 2     services had not been won easily.  At the turn of the
 3     century Bell Canada and the prairie provinces fought a
 4     long battle over access and pricing.  The issue was not
 5     resolved until the three provinces set up Crown
 6     corporations to run the telephone system and adhered to
 7     low cost universal access and high quality service
 8     principles.  In Manitoba, interestingly, it was a
 9     Conservative government headed by Sir Rodman Roblin
10     which established MTS as a public utility, and of
11     course it was a Conservative government under Gary
12     Filmon that tore it apart.
13  218

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