ISSN 0542-5492 First Session - Thirty-Second Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on PUBLIC UTILITIES AND NATURAL RESOURCES 31 Elizabeth 11 Chairman Mr. Phi/ Eyler Constituency of River East VOL. XXX No. 2- 10:00 a.m., THURSDAY, 15 APRIL, 1982. Printed by the Office of the Queens Printer. Province of Manitoba

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Second Legislature Members, Constituencies and Political Affiliation Name ADAM, Hon. A.R. (Pete) ANSTETT, Andy ASHTON, Steve BANMAN, Robert (Bob) SLAKE, David R. (Dave) BROWN, Arnold BUCKLASCHUK, John M. CARROLL, Q.C., Henry N. CORRIN, Brian COWAN, Hon. Jay DESJARDINS, Hon. Laurent DODICK, Doreen DOERN, Russell DOLIN, Mary Beth DOWNEY, James E. DRIEDGER, Albert ENNS, Harry EVANS, Hon. Leonard S. EYLER, Phil FILMON, Gary FOX, Peter GOURLAY, D.M. (Doug) GRAHAM, Harry HAMMOND, Gerrie HARAPIAK, Harry M. HARPER, Elijah HEMPHILL, Hon. Maureen HYDE, Lloyd JOHNSTON, J.

Frank KOSTYRA, Hon. Eugene KOVNATS, Abe LECUYER, Gerard L VON, Q.C., Sterling MACKLING, Q.C., Hon. AI MALINOWSKI, Donald M. MANNESS, Clayton McKE NZIE, J. Wally MERCIER, Q.C., G.W.J. (Gerry) NORDMAN, Rurik (Ric) OLESON, Charlotte ORCHARD, Donald PAWLEY, Q.C., Hon. Howard R. PARASIUK, Hon. Wilson PENNER, Q.C., Hon. Roland PHILLIPS, Myrna A. PLOHMAN, John RANSOM, A. Brian SANTOS, Conrad SCHROEDER, Hon. Vie SCOTT, Don SHERMAN, LA. (Bud) SMITH, Hon. Muriel STEEN, Warren STORIE, Jerry T. URUSKI, Hon. Bill USKIW, Hon. Samuel WALDING, Hon. D. James Constituency Ste.

Rose Sprin gfield Thompson La Verend rye Minnedosa Rhin eland Gimli Brandon West Ell ice Chur chill St. Boniface Riel Elmwood Kildonan Arth ur Emerson Lakeside Brandon East River East Tuxedo Concordia Swan River Virden Kirkfield Park The Pas Ruper tsland Logan Portage la Prairie Sturgeon Creek Seven Oaks Niakwa Radisson Char leswood St. James St. Johns Morris Roblin-R ussell St. No rbert Assinib oia Gladstone Pembina Selkirk Transcona Fort Rouge Wolseley Dauphin Turtle Mountai n Burrows Rossmer e lnkster Fort Garry Osborne River Heights Flin Flon lnterlake Lac du Bonnet St.

Vital Party NDP NDP NDP PC PC PC NDP NDP NDP NDP NDP NDP NDP NDP PC PC PC NDP NDP PC NDP PC PC PC NDP NDP NDP PC PC NDP PC NDP PC NDP NDP PC PC PC PC PC PC NDP NDP NDP NDP NDP PC NDP NDP NDP PC NDP PC NDP NDP NDP NDP

LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES & NATURAL RESOURCES Thursday, 15 April, 1982 Time - 10:00 a.m. MS DePAPE (Clerk of Commit tees): Commi ttee will come to order. I have been informed that Mr. Harapiak will not be available to be Chairman thi s morning. Would the Commi ttee agree to have Mr . Eyler replace him? Mr. Eyler. MR. CHAIRMAN, Phil Eyler (River East): Before we start I wonder if the General Manager could introduce his staff. Leonar d Evans will introduce. HON. LEONARD S. EVANS (Brandon East): Thank you. Mr.

Chairman; looking at what happened last year what the Mem ber for Pembina pr oceeded with. Mr. Chairman, firs tly, I'd like to introduce the new Chairman of the Manitoba Telephone System Board of Directors, Saul Miller, who really needs, ! believe no introduction to anyone here, unless there's some new memb ers present and, of course. with him is Gordon Holland, the General Manager of MTS and he has, as per usual, some staff with him for technical advice and assistance as required.

I believe it was the pattern last year to call upon the General Manager to take us thr ough the report because of his familiarity with the operations and I believe, of course. the report we're looking at sp ecifi­ cally is for t he period ending March 31, 1981, although we may have some comments on developments since then as well. So unless there are further questions, I'd like to call upon Mr. Holland. MR. CHAIRMAN: Mr . Holland. MR. GORDON W. HOLLAND, General Manager of Mani toba Telephone System: Thank you, Mr. Cha ir­ man. May I introduce some of our MTS officers that are here this morning.

Glover Ande rson, the Assistant General Manager; Mr . Ozzie Pedde, our Director of Marketing; Mr . Bob Tinkler. the Director of Oper a­ tions; Mr . Dennis Wardrop, Director of Corpor ate Development and Mr. Gordon Backhous e, the Assist­ ant General Manager Adm inistratio n. With your permission. Mr . Chairman, I'll make a few commen ts on the 1980-81 Annual Repor t as well as on some current activities and then we'll attempt to answer any questions which the Commi ttee may have.

The Annual Repor t was mailed to all member s dur ­ ing the fall of 1981 and was tabled by the Minister at this Session of the Legislatur e. A brief examina tion of the financial statistics in the report shows that total operating revenues incr eased by 11.4 percent; the total operating expenses incr eased by 15.1 percent and net reve nue for the year was $13.449,000. com­ pared with a revenue of $13,185,000 for the previous year. The Capital expendi tu res dur ing the year amount ed to $82.7 41.000.00.

By the end of the year the System had a total of 712,983 telephone s, an incr ease of 25,862 dur ing the year. 20 The total investment in Telecommuni cations Plant reached $793,034,000 at the end of March, 1981 repres enting an average investment of $1,110 for tel­ ephone up from $895 five years earlier. lt has been customary to supplem ent inform ation contained in the Annual Report with commen ts con­ cerning recent and current activities. May I. the refore, comment on the systems major programs and activi­ ties for the period from April 1. 1981 to the present.

The Financial Estima tes for the fiscal year ending March 31, 1982 are sub ject to final year-end adjus t­ ments including those recommended by our Audi­ tors. Thorne. Riddell and Company. Operating revenues for 1981-82 are estimated to be $245,383,000 representing an 11 percent increase over the previous year. Other Revenues will be approximately $1 1, 826,000. making total revenues of $257,209,000.00. Operating expenses, including depr eciation and taxes. are estimated to increase by 16.7 percent to $192,143,000.00.

Debt charges and foreign exchange amor tization expenses are estimated at $54.420,000, compared to $51.775,000 in the previous year. The System has six foreign long-term debt issues, representing 43 percent of total outstanding long­ term debt. The additional costs arising from foreign exchange fluctuations for these issues, as at March 31, 1982. is estimated to be $61.428,000, compared to $71,296,690 at the end of the previous year. The unr ealized loss on long-term debt is being amor tized over the remaining life of the six foreign debt issues.

The amor tization of foreign exchange losses is esti­ mated at $5,568, 000 for 1981-82, com pared to $7,504,000 for the pr evious year. The amo rtization is based on exchange rates at March 31, 1982. In July 1981 series 11 E was issued in an amount of $47,962,244 with interest at 14% percent per annum. Government advances 9W and a portion of 10E were redeemed in the amounts of $15 million and $1,259,000 respectively. Of thi s $14,900,000 was rolled over into unfunded advances with inter est fluctuating at bank prime rate.

Capital expendi tu res for the year ending March 31, 1982, are estimated at $100, 689,000, up from $82,741,000 expended during the pr evious year. The net revenues for 1981-82, sub ject to final year end adjustments and audit, are estimated at $10 million. The debt equity ratio is estimated to be 83.3 percent at March 31, 1982, com pared to a debt ratio of 83.9 percent for the year ended March 31, 1981. There has been a gain dur ing the year of about 19,500 telephones in the residential market, of these 11,650 are extension telephone s.

Telephone gains in the business sector are forcast at 7,800, with exten­ sions contributing 4,400 sets out of this total. As of Jan uary 31, 1982, there were 733,284 tele­ phones in service in Manitoba. In terms of total tele­ phones MTS remains the fourth largest telephone company in Canada. At March 31, 1982. there were 4,648 employees on staff, com pared to 4,677 at the

Thursday, 15 April, 1982 end of the pre vious year; this represents 6.3 employees per thousand telephones,

whereas the comparable figure a year ago was 6.6. MTS filed an application with the Public Utilit ies Board of Manitoba on March 11, 1982 for revised rates to meet projected reve nue requirements in the 1982- 83 and subseq uent fiscal years. Operati ng costs have been increa sing at a higher rate than reve nues; con­ tinuing inflation rates of 13 percent or more and inter­ est rates in excess of 16 percent are antici pated. The application requests ap proval of monthly increases of 60 cents to $1.00 in individual residential line rates, depe nding on the size of the exchange.

For example, the Winnipeg rate would rise from $6.15 to $7.15. Where applicable, monthly charges of 35 cents for colour telephones would be eliminated. MTS has reques ted that telephone rate groups be based on main station only cou nts and that extension tele­ phones no longer be included in determ ining the size of rate group. In dividual busi ness line incr eases would range from $1.20 to $3.20. In Winnipeg this would mean a rise from a monthly rate of $15.95 to $19.15. lt is proposed that long dis tance charges wit hin Man itoba would incr ease by two cents per minute.

For example, the cost of a th ree-m inute call from Brandon to Win­ nipeg would rise from 96 cents to $1.02. On March 5, 1982, the Minister responsible for The Man itoba Telephone Act announced a new policy which would allow Manit obans to own their own resi­ dential extension telephones. MTS was instructed at that tim e to prepare the necessary ad ministrative tariff and to plan an information program to advise Man itobans of the new regulations and the necessary techn ical standards of telephone equipment.

MTS is pr oceed ing to make arrangements for the implemen­ tation of this new policy in order to meet the Ju ne 1 effective date announced by the Minister. The rate for residential extension telephones would be reduced to $1.25 monthly across the province from the present range of $1.40 to $1.65 monthly. The comparison of the proposed rates with those of comparably-sized Canadian centres, attached as an appendix, indicates tha t Man itobans will conti nue to enjoy relatively low rates for telecommun ication services.

The pr ojected rev enue re quir ement s antici pate Capital programs which will continue to meet increas­ ing demand for services, mai ntenance of the plant to modern standards and the ability to meet need for an increasi ng array of services. lt is expected that the debt ratio can be maintained or gr adually reduced. Service Im provement Programs, some of which are described in the following are included in these forecasts. Adjustment of exchange boundaries to accommo­ date change in calling patterns which have taken place over the years is a conti nuing demand by some of our customers.

Some 111 of the 200 exchanges in Man itoba now have free ca lling with a neighb ouring exchange or exchanges. Fur ther efforts are planned in this regard as economic and other considerations permit. A two-year, $6-million program to bring Extended Area Service to 20 additional exchange areas is to be carried out between 1983 and 1985.

The criteria for 21 eligibility under the program includes requests for Extended Area Service from customers in smaller exchanges, those with up to 2,000 telephones, wher e at least 50 percent of the customers in the exchange made at least one long distance call per month to the proposed Exchange Area Service commun ity, and where the two com munities involved are wit hin 25 miles of each other. The Syste m's $34 million Rur al Service Imp r ove­ ment Program was completed in 1981.

Under one element of the program, multi-p arty line loadings were reduced to no mor e than four per line with an average of 2.8, that benefit ing about 45,200 custo­ mers. Under the other element of the program, indi­ vidual line service has been provided to 13,400 cus­ tomer s in 193 com munities wh ere pr eviously multi-par ty service was the standard offering. The extension of individual line service will be ongoing as futur e growth qualifies additional commun ities for the service.

And I might mention with extension outside plant construction and new switch ing facilities, the quality of the service generally has been upgraded. MTS continues its efforts to impr ove service to Northern Man itoba. Regular exhange and long dis­ tance service was provided to 21 northern com muni­ ties in a $20 million program com pleted in 1979.

A further phase of this program is under way to add exchange service and additional long dis tance facili­ ties in 10 other commu nit ies with over 3,000 residents in total; these are Jackhead, Paungassi, Matheson Island, Pine Dock, Little Black River, Sherridon, Anama Bay, York Landing, God's River and Split Lake. This phase, which will req uir e $2.7 million is to be comp leted by December, 1983. As well, sign ificant impr ovements are to be made in com munication services for the com munities of Brochet, Lac Brochet, Tadoule Lake and Shama t­ tawa.

Until now these remote commun ities have had access only to northern radio telephone service, which can be unr eliable due to atmospheric condi­ tions, but this summ er will see each of these com mun­ ities rece iving a si ngle channel toll service provided via the Anik satellite. The cost to establish this service will be $200,000, with an additional $420,000 annually in operating costs, including the delivery of CBC video and radio sig nals to Shama ttawa and Brochet.

The Provincial Automatic Numb er Identification Program, which began in 1976, has equipped a total of 52 exchanges with ANI at a cost of $2.1 million. ANI is an addition in the switching equipment which enables the customer 's number to be recorded automatically when a long dis tance call is made. Previously, custo­ mers were req uir ed to give their number to an opera­ tor when making a long dis tance call, known as Oper­ ator Numb er Identification. ANI will be introduced to the Manitou, Easter ville, Grand Rapids, Cross Lake and Stony Mountain exchanges in 1982.

MTS remains comm itted to bringing its services closer to its customers and contin ues to take steps to be more res ponsive to the needs of its customers and emp loyees. Restructu ring of the Province into regions has enabled the System to develop with the communi­ ties we serve and to more effectively commun icate our plans and activies. Par ticular impr ovements have occurred in the

Thursday, 15 April, 1982 Eastern Region dur ing the past year. The new Regional Admini stration Building in Selkirk, housing about 120 MTS emp loyees, was officially opened on December 10, 1981; a new Operations Centre was opened in Winkler on Jan uary 21, 1982; Portage la Prairie received expanded and enhanced service during 1981; and a new operations centre is to be con­ structed in Steinbach this year to aug ment customer services in this area.

In the meantime the Western Regi on and Nor thern Region organi zations continue as successful decen­ trali zations of MTS services, providing closer contact between the System and its customers. There are now 17 Phone Centr es in operation in the Province following the openings of four more such stores dur ing the past year. MTS opened a store in Flin Flon in Aug ust and followed with similar outlets in Swan River and Selkirk in December.

In Jan uary of this year Winkler and area customers, who had pr e­ viously been served by the Phone Centre in Morden, began receiving direct service from a local "Mini" Phone Centre store. Our customers su pport the Phone Centre program because it provides them with faster service, lower service charges and the ability to shop for various telephone equipment at their convenience. December 31, 1981, mar ked the completion of Pro­ ject IDA in South Head ingley. IDA was a technologi ­ cal experiment designed to test the feasibili ty of a variety of services over a coaxial cable network.

Some of the services in the pr oject included automa tic fire alarms; automa tic meter reading, gas and hydro; dig­ ital telephone service; Telidon videotex services; and educatonal television channels. The experiment successfully demons trated that the technology developed for the trial worked and MTS engineers and techni cians had the opportuni ty to obtain hands-on experience with new and innovative technology. The Elie-St. Eustache Fibre Optics Field Trial was officially inaugur ated in October, 1981. The Federal Minister of Communi cations, the Hon.

Francis Fox, and the then Mani toba Minister, the Honourable Donald Orchard, performed a ceremoni al last sp lice to mark the opening of thi s rural field trial. The trial is currently providing 150 participants in the Elie-St. Eustache area with com munications ser­ vices operating over the fibre optics network. These include individual line service, touch tone telephone, cable television (p aid for by the participants to the local licenced operator). FM radio and Telidon.

In recognition of the bilingual heritage of the area, all corres pondence and informational material is made· available in both English and French. The two data bases accessed by their Telidon service offer the par­ ticipants a growing selection of information and cour ses in French. The five trial sponsor s - the Federal Department of Communications, the Canadian Telecommunications Carriers Association, Manitoba Telephone System, Northern Telecom Canada Ltd. and lnfomart - hope to learn from this two-year trial how fibre optic technol­ ogy may benefit rural Canadian telecommuni cations needs in the future.

The System continues to introduce new technolo­ gies, equipment and services to imp rove our service 22 to our customers. MTS is exploring the various uses of an electronic massaging service, called Envoy, which utilizes a remote computer to store and forward written mes­ sages to Envoy user. MTS itself has adapted Envoy technology to create a new method of transporting its service work orders from various provincial offices to Winnipeg. Our directory and accounting records can now be almost instantly upda ted through the transmi ttal of customer information over the Envoy network.

Such information was previously recorded on multi-copy forms and forwarded through the mail or by ground trarsportation to Winnipeg. Use of field trials of this type by MTS and selected business customer s permi ts us to become familiar with the technology and to study economic and mar­ keting factors, pr epa ratory to its introduction as a general service offerin g. A new commun ications system installed for the Royal Canadi an Mounted Police in Northern Mani­ toba pr ovides greater pr ivacy and effectiveness in commu nications in those areas.

Custom design for the RCMP by MTS - the new network uses existing system microwave towers sites to relay calls from dispatch centres in Thompson and The Pas to RCMP crui sers patrol ling the area. Should the need arise officers in vehicles can be patched to the regular telephone network through the RCMP communi cation consoles, and foot patrols can main­ tain instant com munications with their local offices by means of portable radio-t elephone equipment. All calls can be made without MTS operator assist­ ance.

The new system which went into use in April, 1981 allows more rapid set-up of calls and does not use the public mobile channel as before, but a pr ivate police channel. MTS and the Manitoba Department of Natural Resou rces, in May, 1981, implemented a comprehen­ sive early warning commu nications system to locate, identify and respond to the first signs of fire in Manit­ oba's woodlands. The system integ rates MTS pr ivate mobile repeat­ ers into the public telephone network.

Using these facilities, Natural Resou rces personnel in any air or land location can talk to each other directly or to someone outside the system through the telephone operator. Rep eaters are located at 13 MTS microwave tower sites; because the new system uses the tele­ phone network as well as the series of transmi ssion repeater towers, the com munications ra nge is extended into areas that would be unreachable using conventional mobile technology.

Though the new system is geared speci fically to forest fire control, it is also used extensively in other activities such as fishing, hunting, logging, and wild­ life man agement and pr ovinci al parks patrol · operations. Last spring MTS introduced a new emergency reporting network in Winnipeg and Brandon. Known as FAST, an acronym for Fast Action Safety Team, the service is offered to private alarm compani es. They in turn offer it to homes, apartments and businesses for fire, intrusion or medical emergency reportin g.

FAST uses the same wires that carry telephone service. lt involves a monitoring system connected

Thursday, 15 April, 1982 through the network to an alarm centre in the MTS main exchange. for reco rd ing and routing to the sub­ scriber's alarm company for verification and alerting of the proper authorities. FAST. operati ng 24 hour s a day without disrupting telephone conversations. bri ngs this type of emergency protection within reach of the average residential customer. Busi nesses across Man itoba last fall were offered Remote Call Forward ing Service from MTS.

The new service, offered jointly by the member companie s of the TransCanada Telephone System and the American Telephone and Telegraph Com­ pany. allows a busi ness customer to lease a local telephone number in a distant exchange and to receive client calls on a reverse charge basis. Clients in dis tant cities can reach busine sses subscr ibing to RCF by simply dialing the local seven-digit number; the cal l is automatically forwarded to the home office. Over the next two to three years. MTS will be instal­ ling a 130-kilometre fibre optic transmission network in and around Winnipeg.

Tied to dig ital swit ching equipment and linking exchanges in lnkster, Cha­ rleswood and other Winnipeg locations to exchan ges rea ching to Stonewall and Beaus ejour. This network will provide much hig her carr ying capacity and make possible the del ivery of additional services. A single hair-thin optic fibre has the carryi ng power of a four-inch thick copper wir e, while dig ital switch­ ing with its comput er-based flexibility can route calls as well as data. more quickly and efficiently than the older electro -mechanical equi pment.

These two technologies form a powerful combi nation for the future of telecommunic ations. For fibre optics and dig itization, together with mic­ rowave and satel lites, make it possible to move vast amounts of information with gr eater speed. accur acy and convenience than ever before. and at reasonable cost. In September, 1981, MTS annou nced tari ffs for Telidon services for home or office use. Telidon. a videotex sys tem. was developed by the Federal Department of Commun ications. Videotex is the access ing of information rest ing in a computer data base by means of a keypad or keyboard.

Available only to those with access to private telephone lines. Telidon sets are installed in a simi lar fashion to exten­ sion telephones. "Grassroots" service was announced in September. 1981. as a joint pr oject between Int o­ mart. Canada's largest electr onic publisher. and MTS. The data base contains up-to-the -minute agricultu­ ral information. such as world and local weather reports. quotations from the Winnipeg Commodit ies Exchange updated every 15 minutes, livestock reports. market trends, feed costs. gr ain futu res and other variables which affect Mani toba's agri-busi ness.

Terminals have been placed in the offices of local ag ricultur e representatives at gr ain terminals and credit union offices. In its role as a common carrier of television signals in the province, the Man itoba Telephone System con­ tin ues to contribute sign ificantly to the extension of television service in Man itoba.

The agreements with the Winnipeg operators developed in 1965-67 have provided service availability to virtually all house­ holds in Winnipeg and regular .ext ension with basic telephony services to new su bscribers. 23 In 1978, MTS completed the Inter-City Broadband Network to Brandon and Selkirk. allowing the intro­ duction of cable television service to Portage la Prairie. Brandon, Selkirk and Carberry. This uniqwue coaxial carrier system was subsequently extended to Minnedosa. Neepawa. Rivers. Stonew all. Elie-St.

Eustache and Beause jour with Carman, Mo rden and Winkler also being served through MTS micr owave facilities. Constructions of Local Broad band Networks were completed dur ing the past year in Swan River, Beause jour . Gladstone. Stonewall, Vir den. Sour is, Melita, Deloraine. Killarney, Boissevain and Thomp­ son . In our 1982-83 construction program, LBN faci li­ ties will be installed in Grandview, Gilbert Plains. Ste. Rose, Bir tle. Russell. MacG regor, Steinbach, Lac du Bonnet, Morris. Gimli, Cranber ry Portage and Stony Mountai n.

These major extensions of service are in accordance with Provincial policy to extend services to all Manitoba cent res as quickly as possible. Because the Inter-City Broadband Networks were not in place. MTS has dis tribut ed progr amming received by satellite ground receive stations for oper­ ators in The Pas. Flin Flan and Thompson. On Janu­ ray 5, 1982. the CRTC awarded licences to operators in Flin Flan. The Pas and Thom pson to carry the Cancom services.

MTS engineeers. in co-operation with the Winnipeg Cable Operators. are presently studying the upgr ade of the Winnipeg networks to incr ease the transmis­ sion capacity and quality. CRTC is licenced a cable operator for the Elie-St. Eustache area. This service has been operational since October. 1981. In March, 1982, MTS acquir ed ownership of the local distribu­ tion facilities of Valley Cablevision Ltd. in Carman. Morden, Winkler and Altona. A contract has been concluded covering provision of service to these cen­ tres. Steinbach and futur e co mmunities licensed to Valley Cablevision.

On Januar y 6, 1982, the Executive Council appr oved Order -in-Council No. 19/82. authorizing MTS to est ablish a subsid iary for the purposes of undert aking pr ojects outside the Province of Manit oba. The MTS subsid iary has been formed under the name, MTX Telecom Servi ces In c. As a first venture, MTX Tele­ com Services Inc . joined with Alberta Government Telephones and Bell Canada In ternational in a con­ sor tium known as Spectri Management Canada to bid on a contract for a com munications-management system in Saudi Arabia.

Through participation in this project, MTX expects to make a positive financial con­ tribution to MTS operations and broaden the expe­ rience of its employees. The TransCanada Telephone Syste m. of which MTS has been an enthusi astic member from the beginning. observed its 50th anniversary year in 1981. The system, which includes 10 member companies across Canada, provides long dis tance voice, data and broadcast com munications for most of the coun­ try.

The organization plans and co-ordina tes the aii­ Canadian network of open wir e. cable. radio links, micr owave, domestic sat ellite and a variety of other specialized com munications transmission facilities. TCTS revenues in 1981 wwill be about $1.25 billion, giving an indication of the magnitude of services being provided to Canadians by this association. TCTS headquar ters is located in Ottawa. where

Thursday, 15 April, 1982 several hundred persons, all on loan from their var­ ious member companies, il'lcluding MTS, work on assignments. Their activities encom pass most of the regular disc iplines of the telephone busi ness applied on a national scale. Decisions are made and plans are formula ted or appr oved thr ough the Board and a structure of comm ittees and sub-co mm ittees, each with representation from all the member companie s. The Manitoba Telephone System continues to pro­ vide multi- faceted telecommun ications services that have contributed greatly to the well-being of the pro­ vince.

The prog ress that MTS continues to make, though, would not be possible without the strong interest, efforts and su ppor t of our 4,648 emp loyees located in 81 Man itoba co mmunities. MTS has had especially good success in cont aining staff growth over the years; without layoffs, we are at about the same staf fing level as we were in 1977, yet all our services and productivity measurments show we are doing a better job than ever.

Telecommun ica­ tions, being a high technology industry, has reaped the benefits of important advances in recent years, particularly in the merg ing of telecommun ications and computer technology. This has meant that we have been able to increase our productivity in many instances without having to increase staff to meet the challenges of the industry. MTS has been able to retain many of its employees over their entire work ing careers and to attract out­ standing engineers, technicians, computer perso nnel and other specialis ts.

This req uir es willingness of career perso nnel to adapt read ily to the pace of change and it re quir es that MTS maintain an envi­ ro nment of pr ofess ional challenge and satisfaction to attract skills that are often in shor t sup ply. My I exp ress my hope that the emp loyees of this system will continue to merit the support of this com­ mittee in our efforts to carry out our manda te to pr o­ vide hig h-quality service to all Manitobans at reason­ able cost. January 15, 1983, will mark the 75th anniversary of the Manitoba Telephone System.

MTS, as we know it, has come a long way from that day in 1908 when Man itoba Government Telephones officially came into being after take-over of Bell Telephone of Cana­ da's operations in the Provi nce, giving Man itobans their own telephone system having 14,000 sub scrib­ ers, 700 emp loyees and assets of $3.3 million. The company's present name, Manit oba Telephone System, was adopted in 1921. Its stated purpose from the first days to the present, has been extension of the best possible commun ications service throughout Manitoba at rea sonable cost.

There have been many· accomplishments dur ing our first 75 years and we are proud of our achievements. Planning is under way to develop a program of su itable events to celebrate this special bir thday around the province. The objectives of the celebrations are: to reflect on MTS, its services and its progress; encour age and demons trate our sense of com munity and social res ponsibility; maintain the tradition telephone indus­ try spi rit among our employees; and increase the awareness and understa nding, for our customers and emp loyees, of our changing and expa nding mandate.

We hope Manitobans will join with us du ring thi s ann ive rsay year in observi ng this mile stone 24 for the Syste m. Mr . Chairman, if there are any questions, I would try to answer them. MR. CHAIRMAN: Thank you Mr. Holland. Before we go any further would the Commit tee like to provide some guid ance as to how we will proceed. Will it be page by page? Mr . Orchard. MR. DONALD ORCHARD (Pembina): Mr .

Chairman, I think there a number of questions on a whole range of topics and if I migh t sugg est, possibly we could under take a wide-ran ging discussion which may go from page 1 to page 7 and back to page 2 and then pass the report page-by-page after the discussion has taken place. MR. CHAIRMAN: Is that agreeable to the Comm it­ tee? Very well. Any questions? Mr . Slake. MR. DAVID R. (Dave) BLAKE (Minnedosa): Yes, Mr. Chai rman, I jus t have one.

If the Chairman or some of his staff could give us some idea what effect on the position qf the syste m, the drop in the Canadian dollar of say .01 has on the Systems position of either for­ eign borro wings. Would that figur e be fairly re adily available? MR. HOLLAND: Mr . Chairman, we can try and do an estima te. MR. BLAKE: Yes, I'm not looking for an accu rate fig­ ur e but someth ing in a reas onably good ball park fig­ ure of what effect this would have on the system, on their financial position. MR. HOLLAND: We'll atte mpt, Mr. Chairman, to pr o­ vide an estima te of that before the meeting's out. MR.

CHAIRMAN: Mr. Gourlay. MR. D. M. (Doug) GOURLAY (Swan River): Mr . Chai rman, I listened with interest as Mr. Holland gave his report and I'd like to direct a question with respect to the extended area of service in the Swan River area. The previous ad ministration had announce some plans to extend the area service in a number of areas of Manit oba including the Swan River area and I believe this would include the areas of Benito and Cowan in the 1983-85 period.

However the area of Mafeking has not been mentioned and I'm wondering if there are any plans in the futur e to include Maf eking in the extended area of service, the Swan Valley area. MR. HOLLAND: Mr . Chairman, the Benito Commun- · ity is included in the first phase program, the 1983-85. We're studying next priority situations which we would develop as a second phase and we'll under take to consider Maf eking in that study. MR. GOURLAY: Mr. Chairman, what is really involved in including these areas? Is it quite an undertaking to extend these areas to be included?

You say you're studying the Mafek ing area, Benito will be included in

Thursday, 15 April, 1982 the fir st phase and Cow an in the second phase. Could you briefly just explain what is involved in doing this? MR. HOLLAND: Yes, Mr. Chair man. Basically the areas have to be upgr aded from an ensuring point of view normally req uiring increased outside plant and facilities in order to handle the much high er cal ling rates that take place. That is a function of longer holding times and more freq uent calling. Beyond that of course our present rev enues from to ll disappear as they move into a free- calling, expanded free-c alling area.

So from the one side we have to make capital investments to incr ease capacity in the area and then on the second we lose the toll reve nue that we're presently rec eiving. MR. GOURLAY: In the Swan Valley area, and in par­ ticular the Minitonas exchange, there's the 525 lines, and then there's a 547. At the present time there's no direct dialing - long distance dir ect dialing - from these areas and I was of the opinion that it was to have been changed in 1981.

But at the present time there has been no change as far as ther e has been an impr ovement to the service in those areas and that the number of customer s has been reduced from 6, 7, or 8 down to about 3 per line. But it's still necessary to go through the operator to dial outside of that EAS, that area. I'm just wondering when fur ther improvements might be made on those lines where they can dir ect dial. MR. HOLLAND: Direct dial without oper ator intervention? MR. GOURLAY: Righ t. MR. HOLLAND: Well, as I explai ned earlier our first priority was given to the qua lity of service throughout the province.

That involved the red uction in party lines, and you've made refere nce to that. I also dis­ cussed the Automatic Numb er Identification program and indicated that we h�d com pleted about 57 exchanges in the province and we plan to do 5 mor e in the coming year. That program is gr adually being extended throughout the province. MR. GOURLAY: That's what you referred to as the ANI Service? Those are all the questions I have right at the moment. MR. ORCHARD: Thank you, Mr . Chairman, a ques­ tion to the Minister.

Could the Minister provide us with some details of the term and the terms of the new Chairman of the Board's appointment? MR. CHAIRMAN: Mr. Minister. MR. EVANS: Well, that information is available on the Order-i n-Council appointing the new Chairman. MR. ORCHARD: Is the Minis ter not able to provide us with that information when we're at Man itoba Tele­ phone System perusal of their annual report? MR. EVANS: Yes.

Well, I was just saying that the 25 information is available -I believe it was published in the newspaper s - the appointment term is a pleasure which is often the case. it's a normal type of appoi nt­ ment. The re muneration is the same as the previous Chairman. The terms of reference are not spelled out in the OC. Ther e's no change from the expecta tions or the manda te from the previous Chairman's. MR. ORCHARD: Thank you, Mr. Chairman. Was there any particular dissatisfaction with the retiring Chairman? MR.

EVANS: I would say that there's no dissatisfac­ tion with that person per se, but I'm one who was never critic al of the previous government for appoi nt­ ing people to boards and commissions that reflected that parti cular government. I think this was the intent of separ at ing the Chairmans hip from that of the Gen­ eral Manager's position, and I thought it was a good move, personally, and I think that, ther efore, it's fit and approp riate for governments to decide who they wish to be on boards and commissions to carry out whatever policies the government of the day decides. I had a discussion with Mr .

Bulman, and he did offer his resig nation. We chose to accept it, but there is no reflection of the individual; he is a very fine person and I have no problem with Mr. John Bulman; he is a very fine Manitoban. MR. CHAIRMAN: Mr. Orchard. MR. ORCHARD: Thank you, Mr. Chairman. Well then, I take it that the term of service that Mr . Bulman did provide to all Manitobans, as Chairman of the Board of Comm issioners of MTS is, indeed, recog­ nized by this Minister. The job he did, I believe, in the time that I had to work with him, was exemplary.

He, I think, provided a lot of so lid dir ection as Chairman of the Board, provided a very excellent busi ness back­ ground, knowledge in the investment com munity, etc., etc., which I think made hi ma n outsta nding can­ dida te for Chairmanship of the Board because the Crown corpora tion, as you can well see in the Annual Repor t, undertakes very major expenditures in this province, and the kind of investment background that Mr . Bulman brought to the Board, I think , gave it some very very so lid and excellent dir ection in the time he was there.

I am pleased that the Minister recognized the contribution that he made, and I must say, Mr . Chairman, that although I have no argument with governments making whatever appointmen ts they wish to make on such boards and appointments of chairman to various boards, that I believe in the carr y­ ing out of the mandate as Chai rman that ther e was no politics per se played by the retiring Chairman. He carried out his role as Chair man of the Board with the best inter est of the System in mind, and I thin k.that is all any government should ask of a Chairman of the Board.

His contributions, I think , will provide good solid dir ection for a long while, and I just want the commit tee to know that in the time that I worked with him I fo und him to be an excellent person with excel­ lent credentials to undertake the Chairmanship of the Board, and I want to extend my best wishes to the new Chairman. I wish him success in dealing with some of the many areas that he's going to

Thursday, 15 April, 1982 undertake with the Board. Some specifics now. Mr. Chairman, if I might. The General Manager indi­ cated that the System expects to achieve approxi­ mately a $10 million net rev enue for the fiscal year just ended recently, March 31, and at the same time the System is before the Public Utilities Board for, I believe, an approxi mate 16.5 percent rate increase.

Could the General Manager indicate how close the projecti ons that were made at the tim e of the last rate incr ease, ho w close the projections of net income, in actuality, came to, com pared to the projections that were made at the tim e of the last rate increase before the Public Utilit ies Board? MR. CHAIRMAN: Mr. Holland. MR. HOLLAND: Mr. Chair man, I don't have exact comparisons of our final forecasts to the Public Uti li­ ties Board, but they were relatively close. sur pri singly close, in the forecasts in a time of tremendous change.

I could unde rtake to illustrate those figur es if that would be helpful. MR. ORCHARD: Would it be a fair comment to make that the System achieved probably a high er net income position than what was predicted or pr ojected three years back when they made their last rate increase application? MR. HOLLAND: Yes, they were somewhat high er, not substantially. MR. ORCHARD: The Public Utilities Board will be dea ling with this application; in what time frame would the General Manager expect? MR. HOLLAND: Mr.

Chai rman, we expect that the first public hearings will be held in Winnipeg about the th ir d week of May, and that will be followed by hearings at other Man itob a centres, pr ob ably Thompson, Dauphin and Brandon. MR. ORCHARD: Is there any other, like I'm not fam il­ iar with the hearing pattern of the last application; I take it that Brandon will be the, shall I say, the south­ ern rural Man itoba heari ng spot, there will be no other com munity parti cipating? MR. HOLLAND: Well, Mr .

Chairman, it has been the past practice of the Public Utilities Board to make it as convenient as possible to any citizens who wish to make representation. My recollection is that people from southern Manit oba were represented at the hear­ ings in Winnipeg on the last occa sion. but I would think that if there is interest in ha ving public hearings at additional centres that would likely be very sym pa­ thetically consid ered by the Board. MR. ORCHARD: Thank you.

I note, in the application for rate increase, that the busi ness sector increases will be a percentage high er than that being asked from the residential com munity, and I would offer an observation that business. at the present time, as the Ge neral Manager well knows. because the Telephone System is involved with many of the same constraints on profitable operation of a busi ness as any priv ate 26 enterprise is, that the business telephone rate increase, 1 think, is high in comparison to residential, and I think, if I migh t offer a cri ticism, it's possibly an inap­ propriate time to be increasing at a gr eater rate than to residential customers the costs of telecom munica­ tions to the business sector in Man itoba.

Busi ness is more and more relying on the telephone, I believe, as a means of undertaking accounts collection and a number of thi ngs that you advertise regularly, and I just think that at this time the busi ness commu nity doesn't need to have higher costs put on them. I say that from the standpoint that they will be asked to pay a larger increase than the residential customer, and I do think that is inappropriate vis-a-vis the times that we are facing, not only in Man itoba, but throughout Canada. Mr . Chairman, is the System anticipating a con­ tin ued incr ease in long dis tance toll reve nue? MR.

CHAIRMAN: Mr . Holland. MR. HOLLAND: Well let me say, first of all, Mr . Chairman, that in developing proposals in our appli­ cation to the Public Utilities Board, the ma tters raised by Mr . Orchard were very carefu lly consider ed. I attempted, in my comments, to illustrate relativity of the bulk res idential rates against re sidential rates elsewher e and simi larly the busi ness rates. So I think tha t the member would agree that Manitoba busi ness rates, by comparison with other similar sized centr es as shown on the Appendix, continue to compare very favourably.

This application, of course, deals with only lntra­ Man itoba toll rates. I can cert ainly again confirm Mr. Orchard's view that telecommun ications services are becoming more and mor e valuable to the busi ness com munity and are be ing used increa singly in lieu of travel and air fares and hotel costs and meal costs, so their useage of service has increased su bsta ntially. We have attempted to maintain relativity in the pro­ posed rates. We think that we have, but cer tai nly the Public Utilities Board, at its public hearings, will be considering representat ions and views of all sectors of the com munity.

The TransCanada toll rates have not been increased si nce late 1978 or early 1979 and there is considera­ tion being given, at this point in time, to an incr ease in the In tra-pro vincial TransCanada toll rates. There have been no specific conclusions reached; it's under study at this point. MR. ORCHARD: The last tim e the System applied for a rate increase they were in a net loss position, I believe. That rate incr ease at that time was granted because of a net loss position and understandably so; the preli mina ry position indicates a net income posi­ tion of approximately $10 million this last fiscal year.

Could the General Manager give an indication of what the net income position of the System would be for the next year, if no rate increase were granted or applied for, for that matter? MR. HOLLAND: Mr. Chairman. our representation to the Public Utilities Board will be on an overall revenue requirement, MTS reve nue req uir ement basis, which takes into acco unt many factors, policy relating to

Thursday, 15 April, 1982 debt equity ratio and many other corpo rate financial factors. The present forecasts are that without an adjustment in rates there will be a loss in the 1982-83 year. MR. ORCHARD: Was there an estimate put on the size of that loss without a rate increase? MR. HOLLAND: Less than $6 million, I believe. MR. ORCHARD: Now, my colleague, the Memb er for Minnedosa, asked a question about the impact of say a one cent drop in the value of the Canadian dollar.

A 75 cent dollar com pared to an appr oximately 82 cent dollar as it is today, would I take it, have a fairly signi ficant impact on the Telephone System and their net income positi on. MR. HOLLAND: Yes, Mr. Chairman, if you assume that the U.S. dollar remains fixed against off-shore curren cies and if the Canadian dollar dropped one cent, we would estimate that would have an impact of about $74,000 over 10 years, each year for 10 years, averaged over that amor tization period. MR.

ORCHARD: So that ro ughly a 75 cent dollar, assuming those circumstances existed, in other words, maintenance of the U.S. to foreign currencies, that would mean a 75 cent dollar would have about one­ half million dollar yearly impact, negative impact, on the Telephone System, roughly. MR. HOLLAND: Yes, that would be consistent with this estimate. MR. ORCHARD: Mr .

Chairman, in the rate app lica­ tion the Telephone System is changing their rate grouping from total telephones, which include exten­ sions down to the first set, is that going to change -that won't change the rate grouping if Winnipeg I don't believe- but will it change the rate grouping of a number of other com munities in Manitoba, sign ifi­ cantly change them? MR. HOLLAND: Mr. Chairman, it's being redesig ned to produce minimal impact. lt will not change the Winnipeg rate gr oup; it could affect some of the smaller exchanges.

We're attempting to really make that a break-even transition from the one system to the other and we're trying to avoid any trau matic affects on any one exchange. MR. ORCHARD: So then basical ly that change in rat­ ing method is not expected to negatively impact on the System's revenues and it would have minor changes, it might possibly result in some minor changes in telephone exchanges where the odd one would go down slightly but other than that not a major impact for or against the rev enue position of the System. MR. HOLLAND: Yes, Mr. Chairman, that's our objec­ tive in introducing this change.

There could be minor affects up wards or downw ards on indi vid ual exchanges which we hope would be modest. 27 MR. ORCHARD: If you go to just primary phone sets, that generally dec reases the count of a telephone in any exchange, the number of telephones. There should n't be anybody go up as a result of that rate changing should there? MR. HOLLAND: Well, Mr. Chairman, it will be neces­ sary to redefine the groupings completely on a main telephone set basis from the present groupings which are defined according to total telephones. MR.

ORCHARD: Okay, l follow it more clearly now. ln other words, what used to be the $3.15 exchange group size, then let's pick numbers and say that that was 2,000 to 3,000 phones and that included exten­ sions, now the guidelines to qualify for the $3.15 exchange might be 1,500 or 2,000 main sets. Okay. MR. HOLLAND: That is correct, Mr. Chairman. MR. ORCHARD: The System just last night par tici ­ pated in a CBC poll, a phone -in poll, I believe the question was the Support for the Western Canada Concept, or a question along that line. I didn't have an opportu nity to participate in that.

What sort of an equipment invest ment does the system have to main­ tain to offer that kind of a phone-in poll service? MR. HOLLAND: Mr. Chairman, I'm technically defi­ cient, I would have to ask Mr. Anderson to desc ribe what's there. MR. CHAIRMAN: Okay, if one of the other gentlemen is going to give a technical explanation, could you use a microphone at a table? MR. HOLLAND: Mr . Oz Pedde, Mr . Chairman. MR. 0. PEDDE: Mr. Chairman, I don't have a techni ­ cal explana tion, I just have some of the numbers on the equipment.

There's roughly $4,000-$6,000 set-up charge, and that equipment will be reused for each and every poll that is run. MR. ORCHARD: Mr . Chairman, that equipment, is that a speci fic piece of equipment that the system has bought to specifically undertake this type of poll, or is it a multi-use piece of equipment? MR. PEDDE: Mr. Chairman, some of the piece parts are multi-use, and some of the piece parts are speci fi­ cally for polling applications. MR. ORCHARD: And the system investment in the spe cific portions of the equipment, roughly? MR. PEDDE: It'll be roughly $3,000-$4,000.00. MR.

ORCHARD: A question, I guess to the Minister, Mr. Chairman. Since the issue of western separatism is, I su ppose, quite a sensitive one. does the Minister think some policy guidelines might be in order to possibly keep the system out of the telephone poll business when it comes to some very touchy and sensitive sub jects, such as Weste rn-Canada separ a­ tion? Telephone polls, I think, are an indicator, but

Thursday, 15 April, 1982 hey are sub ject to many many inaccur acies in you ould have somebody tha t runs up 100 phone calls nd offers 100 personal opinions, all of which are not >ossible to identif y, there are a number of problems 1ith the telephone poll such as this one. Would the �inister think it's a wise thing to have the Crown orporation pro viding that kind of a service on such ensitive issues as Western-Canada separation? �R. CHAIRMAN: Mr. Minister. �R. EVANS: I did not hear or see, or was even tcknowledgable of any poll that was be ing taken. IIR. ORCHARD: You didn't phone either then? IIR.

EVANS: I did n't phone, I was not aware that such 1 poll was being conducted, but I would think that the IITS, as any utility, is offering a technical service, and vhile you and I, or other s -I , because of your refer­ mea to it, Mr. Chairman, because of the Member for >embina's reference to it I am now knowledgable to ;ome extent about this poll. I would re mind the memb er that this is one poll of 10w many dozens of polls that may be conducted by rarious su rvey firms throughout the year ask ing opin­ ons of people about political parties or other very ;ensitive issues, who knows?

We're living in a day and 1ge of public opinion polling. I'm not sure how the najor national opinion poll was conducted in Canada !ach month as to which political party you su pport. lt :ould be that they are conducted by means of tele­ >hone polls, I'm not sur e, but the fact is, reg ardl ess, hat ther e are many opin ion polls being conducted all he time and I would think that the MTS role is that of >rovi ding the technical service.

I would think it would be wrong, frankly, to some ­ low or other try to dir ect your utility in one way or the >ther with regard to which poll they could provide the �ngineering and technical service ther eto, and which :hey shou ldn't provide the technical service; I think :hat's where you run into pr oblems.

I think in a demo­ :ratic society more and more we're taking opinion :>oils, whether you or I like them is beside the point, I supp ose. it's a phenomenon of our modern demo­ :ratic society and I would trust that the MTS would play a role like any public utility in the telephone business, and that is provide the engineering service, assuming, of course, that they are paid adeqately for provi ding tha t service. We'll take all the dollars we can get. MR. ORCHARD: Mr .

Chairman, I fully realize that there are polls being conducted probably every day of the week, but there is a difference in the role that any telephone uti lity plays in, for instance, the gall up pole, which is someone sit ting in an office in the Gallup Organization, making phone calls from there to indi­ viduals asking them for their opinion. This one is a reverse situation wher e individ uals, unsolicited, can phone in and make their opin ion known, and ther e is no assurance that there isn't duplication, it's the reverse image of the classic method of polling.

No one has any objection to the pol ling tak ing place when some one, wishing an opinion, hir es a polling firm, whoever that may be, and they undertake with rela- 28 tively accurate and stat istical means a series of phone calls or personal contacts to estab lish their poll. This one is dif ferent, and you could have, for instance -I 'll paint a scenario for you - you could have the Weste rn-Canada concept get on a bank of tele­ phones, .knowing that this poll on western separatism is coming up, and they could make 15,000 phone calls in half an hour and provide a very distorted figure to that question.

The Member for Elm wood says, who would believe the results? I don't know whether his que stion is rele­ vant. Those kinds of polls can be manipu lated, and we're not talking about which brand of soap a house­ wife pr efers, we're talking about a fairly sensitive issue; I question, and if the Minister doesn't believe that it's an area that should provide some ministerial dir ection on, that's fine but I question the proper role of an unscientific poll in such an issue as western separa tism. MR. EVANS: You get so-called unscientific polls, of course, all the ti me.

You have various talk shows, people phone in - they phone in the CBC, I think, during the election, or prior to the last prov incial gen­ eral election. I recall one mor ning they took so many ca lls in so many minutes and it's very difficult, obviously, to control this.

The member is right it is difficult to control it, but at the same tim e I think it would be worse for the government to try somehow to put the heavy hand of state on who can phone in and who can't phone in and so on. 1t seemed to me that, you know, you could talk about the Peter Warren Show, people phoning in and using the MTS, I mean you could reduce it to an extreme case and I think you can then see how unsati sfactory it would be for gov­ ernment to dir ect the publicly-owned MTS to some­ how or other not partici pate in one kind of a phone-in and not in another.

I think we'd be better off just to allow the utility to provide technical service as req uired by various customers, prov iding the utility is not involved itself in desig ning the questions or in any way participating actively in offering opinio ns. If it's pro viding the technical service, I don't see any differ­ ence from pro viding a technical service to other kinds of users who may be using the phone system for political opinion purposes as well. MR. ORCHARD: Well, Mr .

Chairman, you know I don't want any confusion to come out of this, that I'm advocating the heavy hand of government to come down and control when pub lic opinion polls are taken. That's not the question because the Minister said there's a number of phone-ins, the CBC where individuals phone in to offer their opinion to a given phone number.

This is a service being provided by MTS specific to, and th ere's investment by the tele­ phone system to set up a number record ing system that automatically records the opinion, yes or no. it's a specific ad ditional piece of technology that the sys­ tem has developed. it's quite different from previously used, and I suppose still used, methods of pub lic opi nion polling. I simply place the question wanti ng to know whether the Minister was concerned and he's ind icated he's not, that's fine. Mr . Chai rman, I noticed, in your general remarks, that cable service is now being provided in the

Thursday, 15 April, 1982 Morden. Winkler area via pur chase of what used to be, I suppo se. Valley Cable Assets. Could the General Manager indicate the dollar value. the purchase price. with Vally Cablevision? MR. HOLLAND: Mr. Chairman. I did mention in my remarks that MTS had purchased that local distribu­ tion network and had also sig ned agreements with the licensed operator for future del ivery of service. The pur chase price was $1,090,000 and it was made effec­ tive on April 1, 1982. MR. ORCHARD: That million dollar purchase then give the MTS ownership of an LBN System in Carman.

Morden and I believe Winkler. Was there any facility pur chased in Altona? MR. HOLLAND: Yes. Mr. Chairman. MR. ORCHARD: At the million dollars. how was that arrived at? Is that the book value of the assets? Is that the invested capit al that was put in by Valley Cablevision? MR. HOLLAND: Yes. Mr. Chair man. it was deter­ mined by the respective audit ors as repres enting the investment with minim al or no depreciation because the plant is very new. MR. ORCHARD: Now that would mean. like is there further capital investment req uired to bring those four com munities Carman. Mord en. Winkler.

Altona to full service for cablevision? MR. HOLLAND: Mr . Chairman. there are no imme­ diate plans for upgr ade of those networks. We will be pr oceed ing this year with Stein bach which falls in licensed operators territory. That will also include micr owave delivery of signals to Steinbach. MR. ORCHARD: The syste m. MTS. in purchasing the assets of Valley Cable are the commun ities com­ pletely wir ed with the LBN or are there areas in each community that st ill have to be connected to the LBN System? MR. HOLLAND: Mr . Chairman. my impression is that the com munities are quite extensively served.

There may well be peripher al areas that will have to be looked at but generally the commun ities are com­ pletely served at this time. MR. ORCHARD: Is Valley Cablevision still a licensed operator. a CRTC licensed operator? MR. HOLLAND: Yes. Mr . Chai rman. MR. ORCHARD: I take it. now that the system owns the LBN Plant you've estab lished a rental rate for signal delivery to the licensed operator I take it? MR. HOLLAND: Yes. Mr. Chairman. MR. ORCHARD: Is that rental. rate comparable to. say, that charged West man Media Co-op? 29 MR. HOLLAND: Yes. Mr. Chairman. MR.

ORCHARD: Now. is there expected to be, and I realize this is not probably a proper question to the General Manager of the System but. is it expected that the customer rates in those communitie s will remain the same? Ther e hasn't been a sign ificant incr ease in the sig nal cost si nce coming under the telephone system; is it expected that customer rates will remain the same? MR. HOLLAND: Mr. Chairman. we of course don't approve rates to the customers. My unders tand ing is that the operator considers that the economics under our delivery agreements meet his particular needs.

But I wouldn't be aware as to whether he is proposing incr eases; the CRTC ap proves though. MR. ORCHARD: Yes. a couple of questions on exter­ nal contracts. or international contracts. Has the Sys­ tem completed an agreement or about to comp lete an agreement in South Amer ica. I think it was Paraguay. with esta blishing a small local exchange with some surplus equip ment that the System had? MR. HOLLAND: Mr. Chairman. our engineers have developed proposals and engineering designs and costings for two Mennonite Commun ities in Para­ gua y.

Those proposals are with the sponsor s and we have no requests for contr acts up to this time. MR. ORCHARD: So that hasn't proceeded in the last six months really. There hasn't been any new dir ec­ tion or new indication from the customer? MR. HOLLAND: No. Mr. Chairman. MR. ORCHARD: Now. I note that once again there's some work being bid on in Saudi Arabia. The system was previously involved with work with Saudi Arabia. I believe it was even with Bell Canada the last time as well. or Bell International. Was not the System directly involved at that time in that contract? MR. HOLLAND: Well. Mr.

Chairman, we've had as many as 28 MTS emp loyees under contr act to Bell Canada International in connection with their tele­ phone extension project. their major pr oject. And at this time there are still13 MTS people in Saudi. Some of those were also involved in another contract for a private corporation in Saudi, one of the large oil con­ cerns. but there have been as many as 28 involved at one time. MR. ORCHARD: Well. the reason for my question was that I note that as of Janu ary of this year.

MTS will have a subsid iary company, MTX Telecom Services In c .. and th is, from the remarks this mor ning made by the General Manager. will be MTS international par­ tici pation arm. I take it, and I just have a few questions. Why was it deemed necessary to set up a separ ate entity to undertake these international contracts since participation in the past hasn't req uir ed that? MR. HOLLAND: Well. Mr . Chairman. the last arran­ gements were pri marily through Bell Canada lnterna-

Thursday, 15 April, 1982 tional, and our arrangements were with them dir ectly. In the fall of 1981, the Federal Minister of Commun ica­ tions and the authorities from the Kingdom of Saudi Arabia announced a general agreement that there would be a new underta king in Saudi Arabia, the installation of a Spectri Management Program based on the Canadian system, and it was further indicated that that would be contr acted out to companies to fulfil I.

So MTS studied that proposal and thought that, in conjunction with Bell Canada International and Alberta Government Telephones, that the thr ee com­ panies collectively could make a resp onsible tender on the work and carry it out well. On legal advice and other advice, it was consi dered that should be done by a wholly-owned subsid iary of MTS, that the activi­ ties should be clearly delineated and portrayed as being under a separ ate subsidi ary. MR. ORCHARD: Will this MTX Telecom Services have separ ate staff, separate budget? MR. HOLLAND: Mr .

Chairman, it will have its own Board, its own desig nated officers, its own financial programs, and will be kept completely separ ate from MTS operations. MR. ORCHARD: Since this was set up some thr ee or four months ago, is staff in place with MTX now? MR. HOLLAND: Mr. Chairman, up to this point they have no permanent staff. MTS pers onnel have been loaned to them at cost for the necessary activitie s. MR. ORCHARD: Now, will this be a continuing loan­ ing of staff or is it expected that MTX will see new staff being hir ed, a new staff complement separate and apart from MTS? MR. HOLLAND: Mr .

Chairman, one of the reas ons for our interest in undertak ings of this sort is the hope that we can maintain and create interes ting jobs for Man itobans, so we're hoping that if Spectri is suc­ cessful in winning the tender that will require addi­ tional perso nnel, but cert ainly the staff that are assigned to the project will be very carefully selected as experienced MTS people, so I would expect it will be done pri mari ly by contrac ting out seasoned MTS personnel and then likely their replacement, if neces­ sary, in the MTS est ablish ment. MR.

ORCHARD: Then depe nding on the success of MTX, in terms of obt aining international contr acts, MTX could become a sign ificantly staffed corporation as well, even though some of the people cer tai nly would come from MTS, it could end up with a reason­ ably sized staff and budget, I take it? MR. HOLLAND: Mr . Chairman, I think it's been esti­ mated that if we were successful on the Spectri Man­ agement project, it could involve up to 45 people from each of the thr ee partners. MR. ORCHARD: These 45 staff would be under the MTX corpo rate structure rather than MTS? MR. HOLLAND: Mr.

Chairman, MTX would make the 30 necessary arrangements with MTS to assign them to the Spectrum project. MR. ORCHARD: Is there a general manager of MTX at the present time? MR. HOLLAND: No, Mr. Chairman. MR. ORCHARD: Will there be a general manager for MTX? MR. HOLLAND: Well, Mr. Chairman, it is in the tender and proposal stage at this point in ti me, so that we're not making any long-term staf fing comm itments until we know the outcome.

Again, if the project is success­ ful, it will be staffed as a project with the particular expertise that's requir ed for a project of that sort, and arrangements will be made for their dir ection and general management. MR. ORCHARD: So do I take it then that there's no intention to, say, esta blish a permanent general man­ ager in the near futur e for MTX? MR. HOLLAND: I haven't heard that sugge sted, cer­ tainly up to this time. MR. ORCHARD: Just a question to the Minister. Would the Annual Repor t of MTX become part of the . MTS Annual Repor t or will it be filed separately? What's the Minister's expectat ion?

MR. CHAIRMAN: Mr. Minister. MR. EVANS: I'm not really sure. I've not thought of that. I guess we'll have to cross that bridge when we come to it. Maybe I could ask this of the Gene ral Manager, Mr . Chairman, in a sense whether there are now existing subsid iaries of MTS, minor subsid iaries or whatever, or major subs idiar ies I don't know of, but perhaps the General Manager could indicate whether such subsid iaries report separately. As far as I can see, there is no information here apart from the MTS as the major operator. MR. CHAIRMAN: Mr. Holland. MR. HOLLAND: Mr. Chairman, no.

Manit oba Data Services, which was ad ministered by MTS for over th ree years, was operated as a division of MTS, it was not separately incorporated; so that MTX is the only incorporated subsid iary at this stage. MR. EVANS: I can only say we'll cross the bridge when we come to it. Certa inly, the information should be made pub lic, assu ming it doesn't hurt the competi­ tive nature of this particular enterprise, as I under­ stand it, and it also, of course, involves some other partners, but I would say only with that proviso, but we're in a hypothetical position at the moment. MR.

ORCHARD: No, I appr eciate that, Mr. Chairman. The Manitoba Data Services now is freest anding and offers an Annual Repor t, and so that was the nature of my questions with MTX, whether they would, si nce they're a wholly-owned subsidu ary, if it would be

Thursday, 15 April, 1982 appropriate for them also to file a separate annual report, financial state ments in the future. I guess my question to the Minister would be that ifthat develops, and although I realize he's in the formulation stage now, but if that develops, would those annua l repor ts be brought to this Commit tee for discussion along with the MTS annual repor t. MR. EVANS: Well I think they could be, unless there's some gr eat technical difficulty that I don't foresee on that.

Again, it's a bit premature and a bit speculative and hypothetical, but I would think that if it became a sign ificant operating subsidiar y, I don't see why not. Perhaps the General Manager might comment. I see he'd like to make an interject ion here. MR. CHAIRMAN: Mr. Holland. MR. HOLLAND: Mr . Chairman, ther e probably was a pattern developed with Manitoba Data Services, even though it was operated as a division. Its accounts were kept entirely separ ate, pub lished for Man itoba Data Services.

In fact they published a separate Annual Repor t, as well as including it in the MTS Report and then there was consolidated informati on. We're assu ming that the activities of MTX will be fully displayed in our Annual Report. MR. EVANS: lt has a separate division, this is what you're sayi ng. MR. ORCHARD: If they were disp layed, as such, they would be open for discussion now. Just while we're to uching on Man itoba Data Services, we'll be dealing with Man itoba Data Services, appr oxi mately when in this Comm ittee, Mr. Minister? MR. EVANS: I'm not quite sure, I'll have to check that.

This comes under the Minister respo nsible for Crown investments, I believe, Mr. Para siuk. MR. ORCHARD: You're not responsible for MDS as well? MR. EVANS: No, I believe that is Para siuk, so we can check with the House Leader, but I can't tell you right now. MR. ORCHARD: I would like to try to wrap up by 12 :30 and we've got a number of questions, I hope we can do it by then. Project IDA is in the wind-down stage. I sup pose the last recollection I had was that there was a poten­ tial development, man ufacturing development, in at least a portion of the technology developed out there.

A private sector firm was looking at the possibility of furthering the technology into the man ufactur ing mode. Is there a current status on that? MR. HOLLAND: Mr. Chairman, lnter-Discom Sys­ tems Ltd. have contin ued their operations in Win­ nipeg. They have about 22 emp loyees. We under­ stand that an Eastern Canad ian firm has expr essed interest in either acquiring or purchasing equity in ISL and that in the meantime, they're doi ng extensive contractual work for that agency. I am not aware of 31 any final results in those negotiations at this point. MR. ORCHARD: Two questions on IDA then.

Fir st off, is MTS provid ing any funding for lnter-Discom at this tim e and secondly, what's the status on, I believe it was a debentur e that was the nature of the financial instrument used to secure previous participation. What's the status, I believe on that $5,000 debenture? MR. HOLLAND: Mr . Chairman, MTS, other than the IDA project, has contracted for services of ISL on different occasions; small contracts for maintenance on IDA during the demons tration year, they did a study for MTS on certain characteristics of the net­ work having to do with pay T.V. and its delivery and its security.

To my recollection there have been no such contracts in the last six months. MTS, of course, has the debenture outstan ding and it re quir es that MTS be involved in any corporate changes by ISL or any dis posal of their assets, so that we have been kept informed, as a thir d party, in the current negotiations with the Eastern Canadian firm. MR. ORCHARD: Does the System consider the deb­ entur e reaso nably secure? MR. HOLLAND: Mr . Chairman, our hope is that we can achieve a number of objectives with IS L.

We would like to see them remain in Man itoba; we would like to see them be a successful Man itoba corporation and we would like to see arrangements for ultimate recovery of the debenture. So there's a variety of dis­ cussions going on as to whether, through pricing arrangements of products or pr efer ential supply arrangements, that we can recovery the debentur e, but those are not finalized at this stage. MR. ORCHARD: Did I hear correctly? Prefer ential supply arrangements were mentioned - when would those come in? They don't supply anything except consulting services, as I understand it right now. MR.

HOLLAND: Mr . Chairman, this second party is a very exciting, rather new Canadian firm, which is developing some unique and intere sti ng products that MTS may well want to have available in the Mani­ toba networks. MR. ORCHARD: And it would be prefer ential supply of those to be developed products that you'd be refer­ ring to. MR. HOLLAND: Yes. MR. ORCHARD: So then really the current status on that debenture is probably, if I could use the words "as much up in the air today as it was, say six months ago." MR. HOLLAND: Mr. Chairman, I think I'd have to answer yes to that. MR. ORCHARD: On the Elie project.

One of the things that was a question mark on fibre optics was their being able to sustain the rigour s of our climate extremes and this winter we were very fortunate in

Thursday, 15 April, 1982 being able to put the Elie project through one of its better tests in the last few years with the winter we had. How did the fibre optics technology work out? Was there any major sur pris es? MR. HOLLAND: Mr . Chairman, the installation went extremely well, very satisfacto rily. The maintenance experience in it was a irasc ible during say the first three months, but at this stage it's become a very reliable, high quality system. MR. ORCHARD: Ther e was good function then in Janu ary, in the extreme cold, there were no unusual problems identified in that extremely cold weather? MR.

HOLLAND: Mr . Chairman, I think the problems at that time were electr onic gr emlins, I don' t think they were attributed to the environment. MR. ORCHARD: Is the System encouraged that this may well be the way to go in fibre optics, like ther e's always been the question mark as to whether it's truly the future carryi ng method? Is the System encour ­ aged from results to date at Elie that it may well prove to be the boon everybody says it is? MR. HOLLAND: Mr . Chairman, Elie-St.

Eustache, is also a trial or an R and D project. lt has been extre mely successful in demons tra ting that over the fibr e in the local distribution plant you can transmit very high quality video digital telephony, alarm ing the variety of services. The imp edi ments in the local distribution plant are the econom ics, the refinement of electron­ ics, so the interest in the industry well beyond Mani­ toba has been very high in the demonstration project. 1t cert ainly works technically, but we are now waiting the improvements in economics in that area. MR.

ORCHARD: I note the system is planning instal­ lation of fibre optic, I believe, up to Stonewall, out to Beausejour. That's not the same stye of installation that's out at Elie, it's not farm- to-farm installation, it's connecting, really, two communities, is that a correct understan di ng? MR. HOLLAND: Mr . Chairman, it is in the very high volume tru nking, or transmission area, as op posed to local distribution. it's carr ying huge volume of voice and data. MR.

ORCHARD: The Gr assroots Project was quite enthusiastically received last year, does the General Manager have any recent figur es on how many Gr ass" roots customer s are now hooked onto that system in the province? MR. HOLLAND: Mr. Chairman, my reco llection is that there were about 50 units installed in community centres of different types so that the people in that area could access the unit, such as agricultur al rep re­ sentatives and so on; but that there are someth ing over 100 installations at this stage, 100 com mercial installations, in effect. MR.

ORCHARD: Okay, so that means that there's the approxi mate 50 that were on the original trial, that 32 went out to public buildings, and there's now about 100 private customers on top of that? MR. HOLLAND: Yes, Mr. Chairman. MR. ORCHARD: Has the customer acceptance been good, the comments favourable on Gr assroots? Has there been anybody that's had it for a few months and then say it's not worth a damn and give the unit back? MR. HOLLAND: Mr . Chairman, the interest level is in dir ect relationsh ip to the currency and interest level of the data bank, the progr amming.

Our experience in Head ingley, for instance, was that people went through even a 10,000-page data bank with gr eat speed and become fa miliar with it, and then wanted another 10,000 pages overnig ht. lt depends , of course, on how relevant the data bank is to the needs of the particular customers. There has been, I would say, good interest in the agribusi ness sector that is partic­ ularly being served under Gr assroots.

Ther e is a demand for more and more progr amming availability and I think the other other general conclusion is that it appear s to have early applicability likely in the busi­ ness area, retrieval of information by corporations through the Telidon access. MR. ORCHARD: That's good to hear. The next big­ gest thing is we'll be getting all the people in rural Manit oba on a private line so they can all hook up to Gr assroots, and I know the General Manager shares the concerns around this table to pr oceed with that posthaste, and probably in a couple of years tim e we'll be able to get that done.

In cable television services, particularly outside of the City of Winnipeg, the WesMan Media Co-op has a number of com munities licensed and I believe the origi nal intent was the system was going to hook up those com munities, provide signal by ICBN network. What's the current thinking on how to bring the televi­ sion signals into the communities presently not rec eiving signal from MTS? MR. HOLLAND: Mr. Chairman, it is our normal pr ac­ tise to quote to the customer, either extension of ICBN or micr owave, and it becomes a matter for the busine ss customer to consider in context with his busi ness plan.

Normally if he foresees a need for, say, five video sig nals for the foreseea ble future, micr o­ wave tends to be the most economical so lution. If he foresees an ever -i ncr ea sing varie ty of video progr amming that he's going to want to distribute to his franchise territor y, then he becomes most inter­ ested in coax which has a much larger capacity, but we quote normally giving the custo mer the option. MR.

ORCHARD: What strikes me now, and I believe the Minister indicated this in the House th ree or four weeks ago, one of the problems we've got out in Wesman is that to provide their television signa l to some of their com munities in their licenced area, they are pulling off air signal for the Canadian chan nels and they are re ceiving U.S. progr amming off of Sat­ corn via TBRO, by a satel lite dish, and the Minister indica ted that, I think , star ting in July of next year Anik Co rD , whichever it is, will be carr ying probably

Thursday, 15 April, 1982 the th ree plus one. With the advent of satellite sig nal, would not the customer be in a position where he wouldn't necessarily req uir e MTS micr owave or coax cable to deliver that basic television package? MR. HOL LAND: Mr . Chairman, I'm not aware that any of the national programmers have contr acted for satel lite delivery of the three plus one, that is sti ll unknown what will happen in that area. Ther e is a CRTC hearing in Winnipeg on April 20 having to do with licence renewals and that may clarify.

If they are on the satellite we don't know whether they will be scrambled or unscrambled; and then ther e is the further question of study ing the econom ics of sate llite- delivered sig nals versus the existing terres­ trial networks. The Cancom fee, I believe, is $4.00 for their package, so that the operator then has to study the economics of that cost versus MTS "on terrestrial syste ms." That of cour se is a trad e-off on the ICBN portion, the inter-city portion. The operator sti ll req uir es our local distribution plant to get it to the households. MR.

ORC HARD: Well I rea lize that the LBN Plant is st ill needed but in terms of cost, without subsidy from the City of Winnipeg, I think Sat ellite is by far the most economic delivered cost.

For instance, in Thomps on ­ maybe Thompsons not a good one to choose because it is a fairly large com munity - but in some of the other areas I don't think that MTS can provide any terrest rial sys tem, as suming that it's not in place and they're going to have to construct one, I don't think they can provide any commun ity, the size of 2,000 say, with a delivered signal of 450 that is being quoted by Can­ corn so I guess we're back to the discussions we had probably 4 years ago as to how the best method of television signal delivery is and the most economical in the long run.

With MTS having to construct new microwave facilities to deliver television when it appears as if, and I'll have to check back in Hansard because - well the Minister's here he could indicate ­ I'm quite su re, you indicated the other day in the House that there was an American signal coming approximately next summ er I think. The installation cost of a dish in pulling that sign al off sate llite I think is the least cost route to go in terms of capital cost. Maybe the Minister might want to comment. MR.

EVANS: The information I had with regard to American progr amming coming over a Canadian satellite was that the earliest that it could be put on would be next Ju ly, that would be the earl iest. I was also advised, through Mr.

Fox's office, the Federal Minister of Commun ication, there was some interest exp ressed why Canadians in pr oceed ing with the comm ercial delivery of American signals through a Canadian sat ellite but thus far there's no commercial arr angement put in place. lt is possible that it could be done by next July so that would be the earl iest that it could occur, and that ther e has been some inter est exp ressed by Canadians. Mr. Holland is correct there is noth ing firmed up on that. MR.

ORCHARD: Well what we were ta lking about is a technical capability, not a reality, of the signal going to be available. 33 1t is speculative at this time. I'm sure there will be some busi ness persons or Canadian investment would be interest in doing this if it looked profitable. I don't think it's an unrealistic expectat ion but I'm not in a position to judge what the probabilities are. MR.

ORCHARD: With the advent of sate llite technol­ ogy, and I had an opportunity to see some it first hand in Washi ngton in Janua ry, it would look as if we're all going to be living in that era of a one metre dish on our roof top or sit ting in our back yard pulling up televi­ sion signal from somebody's direct broadcast satel­ lites that are going up in the next few years.

In rural Manit oba I really wonder whether there is a future need for investment in micr owave or coax cable to provide signal delivery between commun ities because I can forsee a time in the very near future, purely for television which is the major request in rural Mani­ toba, that there will come very quickly a time when I, as an individual, and practically all residents of Mani­ toba, rural Man itoba, will be able for less that $1,000 put up a dish and pull in all the television they want.

I'm sur e the system must have some concerns about making a new investment in micr owave or coax cable to link com munities that may loose their customer base because of direct broadcast sat ellite and the advent of TVROs which are coming down in price every day. Has the System given that consideration, is the System hesitating or slowing investment in mica­ wave to deliver inter-city signals? MR. HOLLAND: Well, Mr. Chai rman, we've been fol­ lowing that technology closely for more that a decade.

MTS is an equity holder of course in Telesat Canada and I think that their technology is as advanced as any in the world. Through our Board representat ion on Telesat Canada we're able to keep fully informed on those developments. Telesat Canada joined the TransCanada Telephone System in 1976 so that they sit with us in planning the national networks and, of course, the engineers are using sat ellite technology extensively in voice transmission where it is engineer­ ingly the best economic solution.

On the economics side of it, that has to be studied very care fully. it's chang ing ra pidly and likely, as with fibre optics and related electronics, the economics will improve very quickly. But, for instance, we were discussing Can corn at $4 per subscriber and I believe that re quir es a base of a 1.5 million or 2 million people to make that rate feasable. lt re quir es a very large distribution base to render that useable.

There are many other facets of it, the program ming costs, whether Canadians can continue individually to take signals off the American Satcom and their pr emium television wit h no payment to the programm ers and the creative people. So it is a com­ plicated area. We are cer tainly studying it very care­ fully. As I say, the TCTS use of the technology is very extensive to the extent that virtually all of their exist­ ing capacity has been utilized. They're now waiting for the new generations to be launched later this year and subsequently. MR.

OR CHARD: Well, is MTS, in part of their Capital budget this year, are they planning on expenditur e of Capital dollars to, either instal micr owave or coax

Thursday, 15 April, 1982 cable systems to deliver television between communi­ ties in rural Man itoba, is that part of the Capital Investment Prqgram for this coming year? MR. HOLLAND: Yes, Mr. Chairman, wherever we have a customer who has signed a contract for such service. One example would be micr owave delivery of signals to Steinbach. We have other quotations out and if we get contracts we'll fulfil! those as quickly as possible, be it coaxial cable or micr owave. MR. ORCHARD: So that there is ongoing investment to deliver television signals by terrestrial means? MR. HOLLAND: Well, Mr .

Chairman, the ongoing investment, other than in the local distribution plant, will occur as MTS obtains contracts, multier cont racts for such service. MR. ORCHARD: In Thom pson was the System instructed to install a dish to receive Satcom sig nals, 1 think, in the last two or thr ee months? MR. HOLLAND: Mr. Chair man, MTS concluded a contr act with a customer in Thomp son for the instal­ lation of a nurse station, yes. MR. ORCHARD: Was there instruction given by the Provincial Government to under take that installation in Thompson? MR. HOLLAND: Well, Mr.

Chairman, MTS acted under ongoing provincial policy, as we understand it, that Nor thern Man itoba is an exceptional circu mstance where there are no terrestrial delivery facilities exis t­ ing and that the policy should be that, as soon as it's economically feasible, Northern Manitobans should receive service comparable to that of Southern Man­ itobans. As we under stand that policy, we then pr o­ ceeded with our contract. MR.

ORCHARD: I appr eciate that, that's a policy that's been ongoing for two, or two-and-a-half years but specifically, to install that dish in Thomp son to receive Satcom sig nals, knowing the policy is in place, was there instruction given by the Manit oba Government to make that installation? MR. HOLLAND: Mr. Chairman, I would say that ther e was consulation with the responsible Minister on all activities in Northern Man itoba to ensure that what we were doing conformed with provincial policy. MR. ORCHARD: As a result of those discussions with the Minis ter, were instructions given to install the dish in Thompson?

MR. HOLLAND: We received confirmation that our contract for service in Thompson would not conflict with provincial policy. MR. ORCHARD: Once agai n, not wanti ng to bela­ bour the issue, did the Minister indicate that you should intall the dish up ther e to provide that signal? MR. EVANS: Perhaps the question is rather unfair to 34 Mr. Holland. I had discussions with the Cha ir man of the Board, Mr . Miller, who is assist ing me in this mat­ ter, but the General Manager is correct and the Memb er for Pembina is correct.

What we are attempt­ ing to do is to carry on a policy wherein we assure that people in Northern Manit oba are not really discr imi­ nated against, if I can use that term, we want to ensure that all Man itobans are treated as fairly and equitably as possible and, to the extent that the MTS could make it possible , it certa inly did so and responded to the requests of a customer in Thompson, namely, the cable oper ator in that city. MR. ORCHARD: Well I take it then, Mr . Chai rman, that the Minister gave the instruction to the Chair man of the Board that the dish should be installed in Thom pson then. MR.

EVANS: Well, whiche ver way you want to des­ cribe it, I don't think I necessarily had to say you should do this or you should not do that, it's just a matter of events falling into place and it's just under­ stood that the MTS would be in a position to service that particular cable ope rator.

Cert ainly I, as a Minis­ ter, felt that should happen and would cert ainly con­ cur with the MTS doing that. 1t doesn't re quir e and did not requir e some legal document dir ecting or some formal pronouncement, etc., it's simply a matter of carryi ng out a policy that, as you said your self, has been in existence for some time. MR. ORCHARD: Well, Mr .

Chair man, maybe the Min­ ister could have a discussion with his backbench member of this government, the ML A for Thompson, and, si nce he indicates there was no formal instruc­ tion given to MTS, he might have the Memb er for Thompson correct his press release where he indi­ cates that instruction was given by the government to MTS, something that we have been att empting to find out from the Minis ter for some time and have now found out that he did n't give them instruction.

So, in the interests of accuracy, which all Man itobans are deeply concerned with, he might undertake a discus­ sion with his MLA for Thompson and have him peruse the press release to make sure that it's accur ate. We wouldn't want to have Manitobans given the wrong impr ession about the way the new go vernment oper­ ates in relationsh ip to Manit oba Telephone System. MR. EVANS: Well, Mr. Chairman, I think we're sort of playing around with words. MR. ORCHARD: I'm not playing around with words. MR.

EVANS: Well, as I' ve said in the House, I'm not responsible for content of any individual member's pr ess release, I've said that on several occasions. The essential point is that the Government of Man itoba appr oves of this par ticula r move. it's in keeping with our policy, it could have been otherwise but it's cer­ tainly in keeping with our policy of ensuring that the people of Northern Manitoba get adequate television service. After due discussion with the Chairman of the Mani­ toba Telephone System this event took place. Now if you want to call that "gave instructions," I supp ose

Thursday, 15 April , 1982 you could, but I don't like to use those particular words. After adequ ate discussion it was deemed that it was suitable and indeed necessary for MTS to respond to the needs of the cable operator in Thomp­ son so that the good people of Thompson could receive a wider range of television service. MR. HOLLAND: Mr . Chairman, I wonder ed if I could comment briefly on two previous questions.

A ques­ tion was asked as to whether or not there were further upgr ades req uired in the Valley Cablevision area and I understand that there is work needed in obt aining, either the th ree plus one, or two plus one sig nal deliv­ ery to Altona. On another ques tion. it had to do with how closely our forecast to the Public Utilities Board had been borne out by actual experience. I should have ans­ wered that by sa ying that the y were very close to the financial plans which had been app roved by the MTS Board. The Public Utilities Board did not endor se any particular bottom line pattern.

The tarif fs having been appr oved. of course, it was open to MTS to exercise expense constraint and to promote our products and so on, and to do everyth ing possible to achieve the plans appr oved by the MTS Board and we were very close to those targets. MR. ORCHARD: I want to thank Mr. Holland for that information.

Just one com me nt to the Minister, when he indicates he's not concerned about the pr ess releases that his backbenchers put out, I think it should be of concern to any memb er of the Treasury Bench that information contained in a press release is accu rate and I thi nk tha t's incumb ent upon the gov­ ernment to assure that. otherwise, pr ess releases tend to provide the wrong impr ession of the way govern­ ments operate. MR. EVANS: Mr. Chairman, on a point of order. MR. CHAIRMAN: Mr. Minister on a point of order. MR. EVANS: Mr.

Chairman, I want to make it clear I am concerned what people put in pr ess releases ; I si mply stated that I can't be held responsible. As the member could not be held responsible, say, when he was a Minister and one of his backbenchers, let's say, wrote a column in some weekly newspaper. You know. I don't think that it's good practice for Cabinet Ministers to try to muzzle backbencher s, whether it's press releases or columns. I understand the Memb er for Roblin, for instance, just to use an example, writes a regular column.

I'm sure it's a very interest ing column but I don't think that you, as a Minister, should want to try to censor it MR. ORCHARD: Mr . Chairman, a couple more ques­ tions. Is the System, and I posed this question to the Minister in the House about three or four weeks ago about whether there is any plans to expand the office space of MTS either by pur chase or construc tion? MR. EVANS: Excuse me. Did you say the office space of MTS by pur chase or construction? Well, the matter is under consideration. 35 MR. ORCHARD: I take it then that the System is con­ templating purchasing a building? MR.

EVANS: That is an option that's being consider ed. MR. ORCHARD: How close to a decision? MR. EVANS: Perhaps the Chairman is in a better position to answer that MR. CHAIRMAN: Mr. Miller. MR. MILLER: Mr. Chairman, the Board has been wres tling with this problem for some time, and the decisions were made last fall, and reiterated more recently, but no final decision has been made on the matter. We should know, I think, with in the next 90 days what will occur. lt will take about 90 days, I would say. MR. CHAIRMAN: Mr. Orchard. MR. ORCHARD: I take it that negotiations are on the Bestland Building? MR.

MILLER: That is one of the possibil ities, yes. MR. ORCHARD: How has the reaction been to the larger exchanges, the Extended Ar ea Service? Has there been calls received by the System from com­ munities wanting to know why they'r e not part of it and encourag ing the System to move quickly and further along that line? MR. CHAIRMAN: Mr. Holland. MR. HOLLAND: Mr. Chairman, the brief answer is yes, we've had a great deal of interest in it and repres­ entations.

We've responded by saying that we think we have selected the priority areas for the fir st phase, and that as economics permit, we can consider further pha ses. MR. ORCHARD: Yes, I received a lot of phone calls on that as well. We've had this discussion many, many times in this comm ittee and I think I've probably raised it every year, and I don't intend to raise it agai n because the position hasn't changed.

The rapid pr o­ gr ess towards that would be well received in rural Man itoba and the busi ness patterns are chan ging, larger busi ness areas, and I think it's a necessary dir ection that the System will have to take, has started, and will have to continue to take over the next few years. Could the General Manager indicate the size of Capital Budget that they antici pate spending this year? · MR. HOLLAND: Yes, Mr . Chairman, we've recom­ mended an upcoming budget of about $120 million. MR.

ORCHARD: That will be directed primarily in the City of Winnipeg - is that part of that in the upgr ading of the Winnipeg cable system. or are you at that stage yet?

Thursday, 15 April, 1982 MR. HOLLAND: Well, Mr . Chai rman, it continues to be a compe ndium of anywhere from 2,300 to 3,000 projects. However, the dig ital switch at the main exchange in Winnipeg, as Mr . Orchard suggests, will be a major component in the upcoming budge t. MR. ORCHARD: Does the System antici pate spend­ ing any money upgr ading the capacity of the cable system in Winnipeg? MR. HOLLAND: Mr . Chairman, our hope is that we can start during the fiscal year on one area, or per­ haps one area in each of the licensed operator areas.

We're very anxious to get on with one sector and get that upgr aded and start the multi-year program. MR. ORCHARD: Tharik you. One last question. How are the propane cars wor king? Have you got any numbers on their fuel efficiencies and that, that you could make available to the commit tee? MR. HOLLAND: Yes, Mr. Chairman, the project has been very successfu l. I have some very brief figur es, I think.

The cost savings on propane were originally antici pated to requir e a four-year pay back, and it's turned out that the pay back starts after about 40,000 kilometres of operations, and there are maint enance advantages as well in the use of propane. We now have 57 units operating on propane and we expect another 20. We also have 25 vehicles on gasohol. There have been no pr oblems in its use, and our people in charge of the project are anticipating pr o­ longed engine life, but cost-wise, that seems to be in the future as energy prices under the national energy policies start to rise. MR.

ORCHARD: Just one last question. Originally, like you indicate that the pay back commen ces at 40,000 kilometres on propane. What was yo ur original target figur e when you thought the pay back would commence? Was it sign ificantly high er than that? MR. HOLLAND: Well, it was expr essed as a four -year operation to . . . MR. ORCHARD: Tha t doesn't mean anyth ing, kilometres on one end and years on another. That ·doesn't really mean anything to me. In four years, what would you have on those vehicles, a 120,000 kilometres? MR. HOLLAND: I would think probably four times the 40,000. I'd be glad to check that, if Mr.

Orchard is inter ested, and let him know. We do report results monthly to the Man itoba Research Council, so it would read ily available. MR. ORCHARD: Yes, Mr . Cha irman, I'd appr eciate receiving those figur es because I think that's a very intriguing step, the propane conversions, and the information that he could provide later would be just fine. MR. CHAIRMAN: Mr . Doern. MR. RUSSELL DOERN (Eimw ood): Mr. Chair man, I 36 just had one comment to make and I want to make it to the Minister. lt seems to me that, and I'm looking now at Mr .

Holland's remarks at the beginning, that given the fact that the Telephone System has now expanded beyond its origi nal hopes, though ts and dreams - it's no longer just a black telephone and some wires run­ ning along some telephone poles - to cable, radio lengths, micr owave, satel lite com munications in par­ ticula r; but I think the time has come to consider a name change, and I jus t want to say to the Minister, and put a bee in his bonnet, that maybe the name Man itoba Telephone System no longer acccu rately describes MTS, that maybe a Manit oba Telecomm un­ ications System would be a more appr opria te name.

I give as an example, looking historically, in 1908 it was the Bell Telephone System; in 1921, the Manit oba Telephone System; and I think that, given the bur ­ geoning com munications area and all the exciting new possibilities and all the capabilities of the Sys­ tem, that MTS st anding for the Manitoba Telephone System does not accur ately describe the ability of the System to deliver.

I simp ly say that the Minister should give consideration, either now in the 75th anniversary or in the near futu re, to adopting a new name, and if I were going to make that sugge stion, I would say that it should be the Man itoba Telecom­ mun ications system simil ar to Saskatchewan Telecommunic ations. MR. EVANS: Mr . Minis ter, I will take the sug gestion under consideration. MR. CHAIRMAN: Mr. McKenzie. MR. McKENZIE: I just have a couple a couple of questions, Mr . Chairman. I wonder if Mr. Holland could advise how much buried cable there is in the province now? MR. HOLLAND: I did n't hear the question. MR.

MCKENZIE: How much bur ied cable is ther e across the province? MR. HOLLAND: Virtually all new ca bling is being bur­ ied and I think there are figur es in the Annual Report, percent of buried cable? MR. McKENZIE: Is it pr etty well completed in the province, or is there sti ll some aerial wire lines, or phones served by aerial wire? MR. HOLLAND: Mr. Chair man, I'll try and find the reference here. There is a figure showing the number of kilometres of open wire. Maybe Mr. Tinkler knows that figur e? MR. R. F.

TINKLER, Director of Operations: I don't rec all the numb ers specifically, but I might sug gest tha t there are certain constraints in total burial of cable due to the nature of the ground formation, etc. MR. CHAIRMAN: Excuse me, could you come to a microphon e? MR. TINKLER: Thank you, Mr. Chairman. In the

Thursday, 15 April, 1982 Annual Report there are specific references made to the amount of aerial wir e havi ng been reduced by 26,093 km and a total of 4,089 km of buried cable and wire added to the Systems network in that period. As I su ggested, it is not practical, or conceivable, or even achievable to bury in totality all of the distribution due to the nature of the ground formation, rocks, water, things of this natur e that could offer constraints for total burial of cable.

But generally plans are in place to reduce this to an absolute minimum where it's possi­ ble to bur y it and just as quickly as possible. You'll notice that there are places where there are sti ll poles standing. In many cases, the cable bypas sing that has already been placed and it is simp ly a matter of wait­ ing for an appr opriate time to remove the aerial plant that exists at that time. MR. ORCHARD: Mr. Chairman, why don't we just pass the whole report. MR. CHAIRMAN: Is that a formal motion? Moved that the repor t be accepted in its entir ety. Agr eed? (Agreed) MR. HOLLAND: Thank you very much, gentlemen.

MR. CHAIRMAN: Comm ittee rise 37