Telecommunications Privatization, Services, and Provincial Well-being

Crown Corporations, Frontier Centre, Publications

Executive Summary

  • This Frontier Policy Series Paper compares service performance levels after 10 years at two prairie-based telecommunications companies, SaskTel, a Saskatchewan Crown corporation and Manitoba Telephone Services (MTS), a shareholder-owned company based in Winnipeg and former Crown corporation that was privatized in 1996.
  • It tests the effects of privatization on politically popular metrics like the range and price of services, the availability of the services to all citizens, and number of employees.
  • With one exception, there are no significant differences that could be attributed to privatization. The small differences that do exist originated before the MTS was converted into an investor-owned company.
  • The exception is MTS’ acquisition of Allstream, an Ontario-based Telecom company which dramatically increased the size of the company. It is also viewed as an impact of privatization, because it seems unlikely the governments of either Manitoba or Saskatchewan would have supported such a large and risk laden investment by a Crown Corporation.
  • This change has meant that after initial post-privatization reductions, MTS now employs more people. For the years that remuneration data is available, average remuneration is the same for both companies.
  • The paper does not consider the fiscal impacts of owning a telecommunications company from the point of view of a provincial citizen or taxpayer, like tax exemptions or the ability to secure subsidized government borrowing rates. The paper does not consider the fiscal impacts of owning a telecommunications company from the point of view of a provincial citizen or taxpayer, like tax exemptions or the ability to secure subsidized government borrowing rates. Notwithstanding a weaker propensity to invest and expand, publicly retained SaskTel is indistinguishable from MTS.

Read the complete paper in PDF