Vodacom’s view on the Please Call Me saga
● Few South Africans can recall a time before cellphones with much clarity or perhaps nostalgia. Today, cellphones — and their use in everyday life — are ubiquitous.
Life began for Vodacom in 1993 and it was a time of abundant energy, unbridled ambition and blue-sky thinking. No idea was too big and no notion too far-fetched.
The company was built on a bedrock of innovation, in the belief that anything was possible in this new era of mobile communication. The call was to be first to market with every new product.
With exponential growth and rapid change in mobile communication, some things haven’t changed. Among these is our ability to innovate and push the frontiers of technological development, including the creation of a world of ideas for social good.
However, we don’t forget where we came from and we need to be big enough to admit that we don’t always get everything right — and where we get anything wrong, we will show remorse and tender our apologies as we did in this saga on numerous occasions.
In the early years of our daring, innovative and revolutionary changes, we made certain regrettable errors of judgment, including the lengthy legal wrangle with a former employee, Nkosana Makate, and the Please Call Me service. Mr Makate’s self-belief and determination saw him navigate his way through the hierarchy of our courts, all the way to the apex court in the land — the Constitutional Court.
To better understand the history, we need to turn back the clock to when Mr Makate was a full-time employee of Vodacom and when the company would not have considered compensation for an idea in the manner claimed by Mr Makate. A dispute then developed and a protracted legal battle ensued. The Johannesburg high court eventually held that there was no legally binding contract between Mr Makate and Vodacom.
The Constitutional Court, on appeal, subsequently found that there was an agreement between Vodacom and Mr Makate, but noted that an outstanding contractual term — the price to be paid for Mr Makate’s idea — still had to be negotiated. Accordingly, it instructed Vodacom and Mr Makate to enter into negotiations, in good faith, to agree on “reasonable compensation payable to him”.
That all sounds reasonably simple, but in reality, it’s far more complex. Firstly, Please Call Me was an idea, but not an original one. It had already been invented and subsequently patented by MTN. In fact, MTN launched its version, called Call Me, the month before Vodacom did.
Secondly, Mr Makate’s idea was just that, a bare idea — which still had to be assessed for commercial viability and technical feasibility. Neither did he provide any capital outlay nor assume any risk, as any entrepreneur would do in the circumstances.
The product Vodacom finally developed and launched in the marketplace was a very different one from what Mr Makate had suggested in a number of important ways. One of these was the fact that Please Call Me would be available to all customers and not just prepaid customers without airtime.
Significantly, Please Call Me was launched as a free service for subscribers and thus did not generate any revenue. The intended plan to charge for it after an initial period was abandoned, since there were many other similar services in the market, which were offered for free. Like many free services, Please Call Me was overly used by customers in the early days before a cap was introduced, because it was used as a kind of shorthand code. A money-spinner it is not and never was.
To return to the present: we have fully complied with the order of the Constitutional Court. Claims to the contrary are plainly wrong on the facts. It is well known that negotiations between Vodacom and Mr Makate deadlocked because the parties failed to agree on the quantum of reasonable compensation to be paid to him.
In the circumstances of such a deadlock, the same order of the Constitutional Court directs the Vodacom Group CEO (and no-one else) to determine reasonable compensation. Based on this, Vodacom Group’s CEO, Mr Shameel Joosub, received written representations from both parties and then held oral hearings in October 2018.
On January 9 2019, the Vodacom Group CEO conveyed his decision and determination to both the legal representatives of Mr Makate and Vodacom. Having followed the order of the Constitutional Court to the letter, Vodacom’s view, as advised, is that the Vodacom Group CEO’s determination, made in his judicially sanctioned role as “a deadlock-breaking mechanism”, is final. Accordingly, we consider the matter to be closed.
Given the confidentiality agreement signed with Mr Makate and his negotiating team, we are constrained from sharing any information on the negotiations.
This is also the case with the amount set by Vodacom Group’s CEO as compensation. By all accounts, it is a significant amount of money and a windfall for Mr Makate. Vodacom is willing to pay Mr Makate, soonest. The ball is now in Mr Makate’s court.
Mr Makate’s idea was not original: it had already been invented