This article has been reproduced with permission from Tom Makau. It was originally published on his bog here. Background: Safaricom announced new data bundle rates that had mixed reactions, positive in that they were far cheaper than what had been before, negative because of data plan expiry duration reduction and restrictions on the size and number of times one can share their data bundle. Read on.
- Expiry of the purchased data plans 30 days after activation
- Restricted data bundle sharing ability. A user can only share his or her data with other up to a maximum of 10 times in a month down from 50.
Kenyan’s argument is simple; The operator took their money in exchange for the data and therefore the users have a right to use the plans for as long as they please and share as many times to as many people as they wish. This simplistic argument is based on a layman’s understanding of what exactly happens when you purchase a data plan.
When a user buys a data plan, a contract comes into force, this contract is between the buyer and the mobile operator. The contract obliges the operator to deliver the purchased data when and if required by the user. What we need to note however is that the contract comes into force to offer an option, not a product or a subscription.
An Option is defined as “the ability to take a predefined action for a fixed period of time in exchange for a fee. A product on the other hand is defined as tangible form of value. For value to be provided via an option, the seller must:
- Identify some action people might wants to take in the future (browse the internet)
- offer potential buyers the right to take that action before a specified deadline (guarantee the connection to download the purchased GBs)
- Convince the potential buyers that the option is worth the asking price (Marketing activities)
- Enforce a specified deadline for taking action. (Data plan expiry)
Options allow the purchaser the ability to take a specific action without requiring the purchaser to take that action. If you buy a movie ticket for example, you have the ability to take a seat in the movie theater but you don’t have to if a more ‘plotious’ plan comes up that’s better than the movie. Being an option, you cannot seek a refund for not having watched the movie at the advertised times.
Data plans are not a product, they are an option and are therefore bound by time for the specified action to take place. What you purchase is the ability to download xGBs and not the ‘actual’ GBs. This ability is time bound just like your movie ticket. I think the fact that most Kenyans refer them as ‘bundles’ signifies their belief that they have purchased a product.
Some people are arguing that by the fact that money changed hands, the end-user should determine his or her pace of use of the data plan/bundle and there should be no time limit of the usage. What we forget however is that the contract came into place when you purchased the data plan, but ownership was not transferred from the operator because this is not a products but an option. The contract specifies the terms on which the data plan (not bundle) will be delivered to you but it does not transfer any deeds to the end-user. Because options amount to dispositions of future property, in common law countries they are normally subject to the rule against perpetuities and must be exercised within the time limits prescribed by law.
Just like in companies that mostly offer employees share options and not share ownership. Options have limited specified actions and a time limit attached to it as opposed to share ownership.
The best the users can do is to petition the operator to revise the rules governing the options but not pontificate online about what is essentially an offer to take up an option and not buy a product.
When the operator came up with the feature that enabled a user to share or sambaza their purchased data plan to others, what was happening is that users were transferring their purchased option to a different party on commercial basis. The fact that a user could do the transfer many times posed a danger for the operator because:
- The exchange of money and the option was between the operator and the purchaser. The contract is therefore enforceable between these two. Sharing the data bundle was innocently aimed at fostering data usage but had the inadvertent effect of complicating the options contract. Who should complain if the service is slow/poor? The original purchaser or the shared data recipient? You might argue that the recipient has a SIM card and is therefore in contract with the mobile operator, purchasing a SIM card and activating it constitutes an invitation to treat and no contract comes into force by activating a SIM card.
- The option rules must have been understood by the recipient for them to accept. The fact that some people had started purchasing wholesale data and retailing it at much lower prices that the operator was doing wasn’t the issue, the issue was the operator found themselves in a legal quagmire as there were now people on the network exercising options they had not purchased. The retailers were purchasing the wholesale bundles as options and selling them as products.
- An option for a wholesale data bundle has a longer specific action period in which the user can exercise the option. This is assumed to be the consumption of the data bundle in a manner that will deliver the agreed quality of service. A 200GB bundle has a longer expiry period to say a 10MB bundle, this is because based on the network resources, the higher GB bundle can be delivered over a period of time. If you now take the 200GB and ‘sell’ by sambaza-ing 2GB each to 100 people who will then proceed to consume the 200GB within 3-4 days, that voids the contract because the 200GBs were offered at a much cheaper price because there is an element of predictability of the network resources required over a longer period of time in which the 200GB was to be consumed and if these were consumed in a manner inconsistent to the initial agreement which was to ensure that its consumption also enables other users to enjoy their options, the contract is void. Same way you cannot demand a movie in a theater to be fast forwarded on scenes you don’t like, data options have usage rules, if you make such a demand in a movie theater, the option contract becomes void and you will be asked to leave the movie theater with no refund.
Citations on some legal terms taken from: