MagicJack's next act: disappearing cell phone fees

[HipChick]

http://tech.yahoo.com/news/ap/us_tec_gadget_show_magicjack

LAS VEGAS -

The company behind the magicJack, the cheap Internet phone gadget that's been heavily promoted on TV, has made a new version of the device that allows free calls from cell phones in the home, in a fashion that's sure to draw protest from cellular carriers.

The new magicJack uses, without permission, radio frequencies for which cellular carriers have paid billions of dollars for exclusive licenses.

YMax Corp., which is based in Palm Beach, Fla., said this week at the International Consumers Electronics Show that it plans to start selling the device in about four months for $40, the same price as the original magicJack. As before, it will provide free calls to the U.S. and Canada for one year.

The device is, in essence, a very small cellular tower for the home.

The size of a deck of cards, it plugs into a PC, which needs a broadband Internet connection. The device then detects when a compatible cell phone comes within 8 feet, and places a call to it. The user enters a short code on the phone. The phone is then linked to the magicJack, and as long as it's within range (YMax said it will cover a 3,000-square-foot home) magicJack routes the call itself, over the Internet, rather than going through the carrier's cellular tower. No minutes are subtracted from the user's account with the carrier. Any extra fees for international calls are subtracted from the user's account with magicJack, not the carrier.

According to YMax CEO Dan Borislow, the device will connect to any phone that uses the GSM standard, which in the U.S. includes phones from AT&T Inc. and T-Mobile USA. At a demonstration at CES, a visitor's phone with a T-Mobile account successfully placed and received calls through the magicJack. Most phones from Verizon Wireless and Sprint Nextel Corp. won't connect to the device.

Borislow said the device is legal because wireless spectrum licenses don't extend into the home.

AT&T, T-Mobile and the Federal Communications Commission had no immediate comment on whether they believe the device is legal, but said they were looking into the issue. CTIA — The Wireless Association, a trade group, said it was declining comment for now. None of them had heard of YMax's plans.

Borislow said YMax has sold 5 million magicJacks for landline phones in the last two years, and that roughly 3 million are in active use. That would give YMax a bigger customer base than Internet phone pioneer Vonage Holdings Corp., which has been selling service for $25 per month for the better part of a decade. Privately held YMax had revenue of $110 million last year, it says.

U.S. carriers have been selling and experimenting with devices that act similarly to the wireless magicJack. They're called "femtocells." Like the magicJack, they use the carrier's licensed spectrum to connect to a phone, then route the calls over a home broadband connection. They improve coverage inside the home and offload capacity from the carrier's towers.

But femtocells are complex products, because they're designed to mesh with the carrier's external network. They cost the carriers more than $200, though some sell them cheaper, recouping the cost through added service fees. YMax's magicJack is a much smaller, simpler design.

[flvegan]

1. Wow.

That's just...wow.

[napi21]

3. I've used MJ for 4 y4ears for my home 0y9he with no problems.

I didn't know agout the cell phone option until tjos post but I will check it out.

[richmwill]

2. So, I can't use it when I'm out of the house...

...Sorry, that won't work for me.

[greennina]

5. You don't need it when you're out of your house.

Your comment makes no damn sense.

[Statistical]

7. um that is whgat your cellphone minutes aee used for.

The goal of the device is too replace your landline w/ cellphone with added bonus that all minutes at home are routed over the internet for free.

So your "800 minute" plan just became an "800 minute + unlimited minutes at home" plan

[Raine]

9. I never use up the minutes

that are part of my plan so this would be of no benefit to me. I need less minutes not more.

[greennina]

4. Motorola had these phones in the early 90's

If you were at home it used your land line rather than the cell phone companies line. Since I had to use a phone at that time for work, the Motorola device saved my employer hundreds of dollars a month.

[beyurslf]

6. That will be great. I know we use a lot of minutes while at home.

Will it support more than one cell phone though? We have 5 cell phones in my house or would I need a jack for each one?

[lildreamer316]

8. This will be great becaue t=mobile KEEPS DROPPING CALLS IN MY HOUSE.

Sorry, but it REALLY pisses me off. When I had Suncom (that Tmobile took over last year) I had absolutely NO problems placing and keeping calls in my house. Now I drop them all the time. It's extremely frustrating.
Maybe this'll learn 'em. Ha.

[Matariki]

10. I have Ooma - I love it so far.

Doesn't have to run through a computer and is therefore more reliable.

I ditched my overpriced comcast account for this. The comcast line always had static and dropped calls. The free Ooma service is clear and reliable so far. The cost is a bit higher than magicjack, but from what i've heard the sound is better. And the cost was covered in three months compared to my comcast bill.

here's their website if anyone is interested: http://www.ooma.com/