Bell returns to Manitoba

Manitoba history is filled with examples of irony. Perhaps, among the greatest ironies of all time was the recent sale of Manitoba Telecom Services Inc. (formerly the Manitoba Telephone System), or MTS, to BCE Inc., or Bell, for $3.9 billion — the very company that was ousted from the province 108 years ago through the provincial government forming a publicly-owned utility.

At the turn of the 20th-century, Bell Telephone of Canada had few friends in Manitoba. Almost daily, newspapers criticized the company’s high rates for service, farmers ripped into the company for failing to extend telephone service into rural areas, and politicians threatened to end the company’s near stranglehold on the marketplace by creating some form of publicly-owned telephone system.

How times have changed. Bell is now promising to invest in infrastructure and improve service, with rural regions singled out. But, there is a fear that cellphone rates will rise in order to be in line with fees paid by Bell customers in other provinces. Under MTS, cellphone rates at $65.76 a month in Winnipeg for GB of data and unlimited Canada-wide talk and text plans were cheaper than those charged by Bell. For example, Halifax Bell customers are charged $122.21, Montreal customers $94.76, Toronto costumers $117.93, and Vancouver customers $117.65 per month. The only cheaper rate in Canada than Winnipeg’s is in Regina, where SaskTel, a publicly-owned company, charges its customers $65.52. The national average is $107.50.

MTS in Manitoba was in a highly competitive marketplace, having to maintain its high market share against the so-called big-three, Bell, Rogers and Telus, by offering lower rates. As part of its purchase in Manitoba, Bell  will spin-off one-third of the cellphone customers to Telus, but the company will still have by far the higher market share and be able to virtually dictate the direction of the market.

The sale of MTS to Bell is expected to take at least nine months to a year to complete (the Competition Bureau is now reviewing the sale).

In the context of Bell’s earliest foray into Manitoba over a century ago, momentum was steadily building to end Bell’s power in the province. Bell had for years been sowing the seeds of discontent across Manitoba by giving the impression that it was arbitrarily raising phone rates to line investors’ pockets. Also, rural Manitobans were becoming increasingly frustrated by the company’s failure to deliver promised telephone service to their farms and communities. The Grain Growers Grain Company (forerunner of the United Grain Growers) led the fight for rural lines and government ownership, claiming the existing companies were only interested in communities where high populations made telephone service profitable.

“It was operated as a profit-making monopoly, and so refused to extend lines into the thinly-populated parts of the province,” wrote Ed Whitcomb in A Short History of Manitoba, “precisely where most needed.”

The Baldur Gazette on October 4, 1906, contained an editorial that claimed the company had long been in business in the province, but the vast majority of farmers were still waiting to obtain service. “A Company which has taken 25 years to discover that farmers require a telephone service in an agricultural country, such as Manitoba is, has little ground upon which to base the assertion that it is a pioneer and has shared the responsibilities of ‘old timers,’” ended the editorial criticizing the company’s claims that it was joining farmers as a pioneer in building up the wealth of the province.

Manitoba Premier Rodmond Roblin in November 1905 recognized a political opportunity and seized upon the burgeoning dislike Bell attracted. It helped that much of the dislike was located in rural areas where the vast majority of seats in the legislature were found. Roblin proposed a plebiscite allowing Manitobans to vote on their preferred type of telephone service.

In a November 23, 1905, speech

reported by the Manitoba Free Press, Premier Roblin outlined the government’s policy for “a telephone system in the province ... owned and controlled by the municipalities and the government jointly ... We have reached this conclusion ... that the telephone is ... one of the most desirable and necessary facilities for the dispatch of business and for the convenience and pleasure of the people. Therefore, the price of telephones should be so low that laboring men and artisans can have the convenience and advantage of the telephone, as well as the merchant, the professional man ... and it is our intention to recommend to parliament (provincial legislature) a proposal of this kind with a view of giving a telephone system to all classes at cost.”

In the meantime, Bell attempted to show Manitobans it was prepared to expand and improve its service, although such measures did little to convince Manitobans Bell was finally addressing their concerns. Bell did double the number of subscribers in 1906 and 1907.

The March 7, 1907, provincial election essentially was a contest between the Roblin government’s dual municipal and provincial system and the Liberal Opposition’s call for a single provincially-owned entity.

While the Roblin government had a mandate from the people to proceed with its telephone policy and undertook construction of long-distance lines, municipalities were more cautious in taking up the province’s proposal for local service “at cost.” Many municipalities, including Winnipeg, declined to co-operate with the government. The government faced the dilemma of either abandoning its scheme altogether or embarking upon the government-owned scheme advocated by the Liberals. The government chose the latter as the lesser of the two evils. In September 1907, construction began on a telephone exchange in

Winnipeg in opposition to the local system of the Bell Company.

On December 12, 1907, Premier Roblin began negotiating in Winnipeg with Charles Sise, the president of the Bell Company, for the purchase of the company’s equipment and assets in Manitoba. Apparently, the Manitoba election result and the construction of the exchange in Winnipeg convinced the Bell president that the company’s welcome in the province had come to an end, so its assets were sold to Manitoba for $3.3 million. On January 15, 1908, Manitoba Government Telephones (later renamed MTS) was created, and Bell’s presence in the province ended, apparently, until now.

Of course, the sale to Bell won’t have been possible if MTS hadn’t been privatized in 1997. While in opposition, former Premier Gary Doer argued that the Tory’s decision to privatize MTS would result in the company’s head office moving from Manitoba to elsewhere. He was right, but whether privatization was wrong in a changing marketplace is a matter of debate — just as the debate about the recent sale to Bell will solicit many differing opinions. The great irony is that Bell is back, when 108 years ago, Manitobans felt they were hanging up on the company for the final time.