MagicJack’s Making Cell Phone Fees Disappear

Source: AP

MagicJack's new version of the device allows free calls from cellphones in the home and cellular carriers are not happy about it.

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.

Showing 49 comments

handcheck at 9:41pm 29th January 2012 I have a Majic Jack Plus, Bought a IPod Touch for $99.00, Pay $30.00 A month for 4 gigs of data. Bought a cable that converts Cat5 to Usb2, for $10.99 [Cables Unlimited], Majic Plus, allowed me to port my home phone number for free,you Don't need a computer to use Majic Jack plus, I have a USB port built into my Car. I got rid of my home Phone, 69.65 a month bill, Ditched my Local TV Cable company, $107.85 a month. Ditched my cell Phone Company, $218,85 per month with a 21% discount. So all I have is a Majic Jack Plus, Paid for five years, $79.95Paid once see them in 2016, I own the IPod Touch so no bill there, it gives me 5 WiFi connections, you can port TV programs from it to, the new flat screen TV's great picture, Rent Streaming Movies from Netflix and Block Buster, with the Cat5 to Usb2 Cable, you port from the IPod Touch Dock to Usb to Cat5 plugs ino Majic Jack Plus, In my Car I had saved my old Bag Phone, all you need is the head part, plugs into the Majic Jack Plus Perfect, which is attached to my Car Sterro unit, hands free. So no home cable or DSL crap or bill, for a Lan connection, No Cable TV bill, No Home Phone Bill no Cell Phone bill, when done this way in auto Any place I go, I have acts lke Feels like Cell phone service, Have any movie I want, any TV stations I want, The WiFi come from the IPod Touch, for my computers, when at home or on road, I use a old StarTec phone when walking any place make calls to anywhere from anywhere I want, have voicemail, Alot of stuff the Majic Jack Plus fits in my pocket, the cell phone and IPod Touch connect to my belt, small not heavy at al, ost important is, What I use to pay for home phone cell phone cabe Tv and Cable land connection and Cell phone, together was $486.37 a month with no over minutes, Now my Monthly cost is 30/bucks a month thats replaces everything! Savings $456 a month, works like a cell phone, uses like a cell phone, looks like a cell phone can go anywhere plus 411 is free, Yes I am a MIT Grad PHd in Eng., what I save a month from before is more than a car payment plus, Love my Majic jack Plus and my IPod Touch, oh yes can play games with others on line like a play station too, I feel like I was reborn back into the 60's when a single home phone party line was about 15 bucks, TV was free, and it cost a 1,50 to go to a local movie house, with popcorn and a drink per person, except I get to go any time of day! This device is great, would not trade for the world! Be inventive, it works great! I love the USA!!!!!!!!!!
eviltweety at 8:04pm 5th January 2011 T-mobile has UMA, and both service providers' Android phones have apps for Vonage (free calling in the US, no minutes used..and no you don't have to have active service..my 3g phone calls now..canceled my acct in October)
slushpuppymals at 5:34am 21st December 2010 MagicJack has worked very well (here in Canada, with a Canadian number). I use it as a primary phone, on a good computer with a good DSL connection with a triple set of normal handsets. Used on a poor computer, with a poor internet connection, it barely functions. It does not usually have the ability to dial to most 1-800 numbers, and cannot handle massive downloads occuring while a telephone call is occuring - however these are pretty easy to remedy (call the tolled line and don't dload while telephoning). It does drop a call occassionally, but that is simply the Internet failing occassionally, not the device. USA is cheaper for cell phone data/call plans by about 25 - 40% depending on where you go and how hard you look, in comparison to Canada. Only basic text/phone 'unlimited plans are really in this country. And a time- and data-limited, but reasonable Smartphone package for North American coverage (from Canada) is in the neighborhood of $100 (6 gigs data + 350 minutes, etc.
daniel7rusu at 9:13pm 4th December 2010 The magic jack is sweet. It's saved me alot of money. I recommend it to all my friends. Check out: http://www.easymagicjack.org
youdontneedmyname at 6:53pm 25th August 2010 I really don't like it. I mean it's basically just regular magic jack, but instead of plugging a land line phone into it, it works with cell phones. But, it ONLY works in your home. It doesn't let you take the cell anywhere that's a not a cell phone dead zone and use it there. I thought the whole point of cell phones is you can use them wherever you want. That's why are they called mobile phones. This device only let's you use them in your home, not out and about.
1. hockey at 12:36pm 26th August 2010 MJ/cell is as "mobile" as the computer it is plugged into. can be used in the auto if your ride is close to 'hotspot', which is almost everywhere there are people. on trips, when i make my pitstops i check forra wireless broadband connection. if i find one, i can use the MJ to make calls. toggle switch in MJ program allows use of the built in speaker/mic on my laptop for 'hands free' calling. cell phone not needed AND i'm not paying for the broadband either. eliminates bogus 'roaming' charges from celly carrier. good vacation strategy as well, broadband avail almost anywhere near hotels. at home i use simple traditional 'cordless' phone plugged into MJ. $14.95 a year??? thank you sir, may have another
Herbert Cruz at 12:24pm 22nd August 2010 me parece pero tpero me queda el beneficio de la duda el texto aquí ! Herbert
Xybertweaker at 5:36pm 19th August 2010 To see all specs on ur phone u can check out www.gsmarena.com, this site will also give u specs to US based and Euro Based phones as well as phones yet to be released. MagicJack can be used in any country once u know how to configure it, in fact it has been tried, tested and successful. Just make sure both parties have ample bandwidth any speed higher than 387kbs. I have been working with the ITU for the past 7yrs, and have extensive knowledge abt wireless devices and cell companies. Want insider tips, make friends with a telecommunications Pro (Myself), Radioshack employee or a Sales rep for cellphones.
Xybertweaker at 5:14pm 19th August 2010 GSM has 4 frequencies ranges in which a phone can use at any time; 800,900,1800,1900 MHz . GSM phones are either dual,tri or quad band phones. I know this bcuz I worked in the telecommunications industry for a while, and know the operating frequencies for devices that start using the radio spectrum from 3KHz to 4.5 GHz , that's would include AM radio up to Satellite signals (GPS service). I also have and still use a Motorola v360 (great phone btw). Bluetooth has limited range and even a weaker signal strength freq # under 80Mhz , Using the bluetooth band u have to complete with other devices lik ur hands-free set, car hands-free set and other ppls hands free sets, remember you are all using the same freq. so u will have interference within a scope of 10 -20 ft depending on line of sight. Freq. from 100 -250 range have these; all over-the-air channels and 50 cable channels, police, air force, army, navy, NOAA, civilian and amature bands. (HF - High freq. band ranges from 30Mhz - 300Mhz) CDMA and TDMA use the freq. bands but with their own unique carrier's encryption code (CDMA when tested only goes up to 950MHz) . TDMA - Time Division Multiple Access, CDMA - Code Division Multiple Access, GSM - Global Service for Mobiles So plz ppl don't confuse yourself with technical aspects of GSM freq. as well as cellphone carriers freq. There are a lot of free services out there that smart ppl lik cell carriers exploit for money. I know for a fact that a lot of ppl are using the HF band to talk for FREE example: from Russia to Brazil daily, overall equipment costs under -$150 USD, send signals as far as MARS - Priceless.
Gadgets and gifts for men at 10:03pm 3rd June 2010 The gadgets looks cool to me, so no problem. :D
canadian at 10:53pm 28th April 2010 apple could do it, but for now it would work because if you had on in your home, you can simply go to the settings and tap "carrier", where it will scan and find the magicjack. You tell it to connect and it works! It could happen
mark ali at 7:07pm 24th April 2010 cud it make to cell phones in the us or only landlines?
calling cards at 9:34am 23rd April 2010 nice gadget, that was the technology can do and help us in many ways like improving more machine, invented a device which can repair a things, and also our medicine which is the list in the most person needed to live in this world, and that gadget is a cellphone and you know cellphone help us to give a communication to our relatives around the world
vin at 6:42pm 12th April 2010 You comment made no sense. Its not Bluetooth at all and it uses the cell phones signal and then sends the call over the web via a magic jack service.
Mike at 3:35am 25th March 2010 I use a Jabra bluetooth speakerphone to make calls with MagicJack plugged into a bluetooth-enabled computer. Could a bluetooth-enabled cellphone take the place of the Jabra?

I do not own a cellphone so I can't test the idea.
Gary at 1:00am 12th February 2010 I have used the regular magic jack for two years and I love it. As long as you have high speed bandwidth then your phone service is as good as the good old fashion phone. I signed up for "dry loop" 30.00 a month (no phone service needed) High Speed Internet service. And I surf and watch videos on my PC while using the phone it's awesome and if this new magic jack supports cell phones then I'm in. Keep up the great work magic jack you have saved me a lot of money if you can come up with a way to just provide Internet service we could totally drop the phone companies. Thanks Gary
1. mark at 2:19pm 3rd December 2010 Yes you got to have High Speed Internet service 15 meg down and 1 meg up my ping time is 20 mil it woks just like A land line phone
dang at 12:14am 4th February 2010 Isn't AT&T just charging your for the data you are sending/receiving then? Or, are you using MagicJack and still getting charged?
jayjay at 9:31pm 3rd February 2010 no im a pre-paid but what i mean is it's connected to my router
dang at 5:11pm 3rd February 2010 Do you have an unlimited data plan?
jayjay at 5:06pm 3rd February 2010 how can you do that bro because i have a phone with wifi, and everytime i connect it to my router to check email or chat at&t charged me in my every minute that i'm connected to my router. thar's how crazy the at&t.
leswards at 6:44pm 22nd January 2010 i know you know better than that, the time you didn't spend reading up on the keywords in this thread you wasted on writing your wrong opinion, picocells are to cellphones like your ipod fm transmitter, they are low powered radios covering short distances and therefore excempt from frequency management authorities, to the service provider they're good only if its theirs, however, magicjacks version is a service providers business model nightmare, furthermore, the bluetooth stack never allowed a cell phone to become headphones, it's just not in the protocol unless this has changed is harder to accomplish than a 50 buck picocell.

just need one thats open source, to use them old nokias with skype, that would be sweet

Leswards
SE at 1:10pm 21st January 2010 thank you, good point. it made no sense...'uses cell towers/frequencies and viop'...? and for anyone considering a femtocell purchase, save your money, as we shouldn't be paying the mega-carriers additional monies for a service (i.e.-coverage in your own home!!!!) that should already be provided...and that we are currently paying for! ta ta
Chuck at 9:04pm 20th January 2010 If you own a phone with biult in Wi-Fi (like the HTC Shadow 2009) and you have a wireless router in your home, you do not need this.
Jacob Ross at 9:08pm 18th January 2010 GSM only goes up to 800MHz, Verizon and Sprint use CDMA which uses 800, 900, and 1900Mhz, There is no 1800Mhz frequency fone.
spys at 10:17pm 10th January 2010 Seems great but I've heard some real stories about the original Magic Jack. Apparently it used to be great but as more people got on to it alot of the calls don't get made and instead get a message telling that the available connections are overloaded. So you end up not being able to use it most of the time and really can only use it if you make calls at irregular hours of the day like early in the morning when post people are asleep.

I assume it's using the same network structure as Magic Jack so prepare for even more overloading.
Nappzman at 4:25pm 10th January 2010 Very interesting disruptive technology. I also wonder if this is only for outgoing calls? if it truly works like a cell tower the carriers wouldn't be able to detect this as part of their grid or an adjacent interconnect carrier so the call would get routed through to the cellphone via traditional means. I guess you could be virtually anywhere there is a broadband connection and use a GSM phone with this tower.
Chris Siburt at 11:13am 10th January 2010 My thought exactly Sprint wanted to charge me for my Airave, but thankfully I was in a bargaining position being out of contract on 1 of my 2 lines. They gave me the device for free and waived the monthly fee, but since a large majority of my calls go out over my own Internet connection by rights they should be giving me a discount for lowering the load from their tower. Oh well, I guess.

This device has promise, I'd like to see it in a CDMA version, and I also wonder if I could use a non activated GSM phone to send and receive calls?

Maybe I'll go ahead and bite the bullet and switch to a T-Mobile month to month plan on a Nexus One and pick up one of these little toys for in the home calls. I do loathe cellular contracts.
Alvin at 11:03am 10th January 2010 can you just make call or will you be able to receive calls
J7 at 4:21pm 9th January 2010 Makes me curious, since cell phones are programmed to use certain tower codes only, do we have to know how to reprogramm our phones, what about the phone lock codes. Or do they magically have a list of tower codes to put in their device.
David at 2:40pm 9th January 2010 This majicjack device is exciting and interesting because a) people will hack it quickly and use the device with asterix and the like, just like they have with the previous majicjack offering, and b) it may force cells companies to lower the cost of femtocells. The current model of a cell company charging YOU to backhaul THEIR traffic over YOUR internet connection is the height of arrogance. They should be PAYING me to use MY connection, not the other way around.
Michael C at 12:11pm 9th January 2010 Two things... The carriers get to charge what they like to carry LD. They tend to overcharge because they can. The specifics of the savings depend on your carrier's LD offer for you, which can differ from customer to customer, much less plan-to-plan or carrier-to-carrier.

You can compare against MJ's list, which is currently at:
magicjack.com/international

The other thing to note is that the cell carriers bill you for your use after the fact. Looking at the MJ FAQ, it seems they require you to prepay for your LD, and they then deplete your account balance at the rate determined for your call. Annoying if you have to call somewhere and have nothing left in the account.

Also, I didn't purchase an MJ, so I don't know if you can prepay as you wish, or only in predetermined increments (eg: $5, $20, or $50 at a time).
Nicola at 12:08pm 9th January 2010 Hi i live in New Zealand. and i use the magic jack, to talk to my friends in USA as they only have cell phones not a land line and its very expensive to ring cells overseas.

I works ok and the magic jack thinks i am in usa. but it breaks up quite bad sometimes. buts its free. and all i do is plug it into the laptop and into my phone line and it connects and goes over the internet.

i won't be buying the newer one when it comes out.
Mike C at 12:02pm 9th January 2010 I think you misunderstand... It isn't connecting over Bluetooth. It's connecting over the carriers' own frequencies to your phone. Specifically, it's using the GSM frequencies, which is why some carriers' devices will work with it and others won't. If it was Bluetooth, then any Bluetooth-enabled phone ought to work.

Essentially, what happens with a cell phone is you use a radio connection to "talk" to the tower, which turns your conversation into (possibly digital) electrical signal it backhauls into its communication network.

As explained, it seems like this version of the MagicJack hardware spoofs the tower to replace the phone-to-tower portion of the communication.

The authenticating call bit looks like its done to authorize the specific phone to use that "tower" by providing a PIN to the tower through that phone. This is similar but not the same as the Bluetooth pairing procedure, which isn't a call but a software setting in your phone.

As for the back-end, the MagicJack does the same as it did with the previous hardware... it digitizes the call and sends it out over the Internet using VOIP technologies (previous rev was G711, probably the same with this one to keep processor requirements lower than for G729) and bridging SIP to PSTN for only the annual fee within USA/Canada.
roger at 11:19am 9th January 2010 Any idea on savings for international calls?
bobj3123 at 10:38am 9th January 2010 The key word is "connection to a PC." it has nothing to do with a cellphone. The difference between this and the normal magic jack is that with this you're forced to hold your cellphone to your head the whole time instead of just using a headset. Seems less convenient than the other plethora of VOIP services out there.
Greg at 10:31am 9th January 2010 We'll see how stupid this is when Magic Jack takes in millions for it and at the same time cell phone companies lose millions because they can't charge for the call. Hardly stupid. Magic jack is the best phone connection to a PC that exists and this will simply extend its usability and range. I agree with the comments above, make sure you have the bandwidth. Magic Jack saves me THOUSANDS of dollars in my small business.
bobj3123 at 9:08am 9th January 2010 This is stupid. It says it uses the carrier's frequencies, but then it says it does it over the internet without using towers.. It's just a bluetooth dongle. You pair your phone and use the 4 digit pin to pair the device like any other bluetooth headset. It just uses your cellphone as a mic and speaker, it doesn't use the tower. Better off just using skype or google voice and get a nice pair of headphones with a mic.
chuck at 8:56am 9th January 2010 NO it doesn't. My parents have it in the Bahamas and i call them all the time. they sound like they are across the street. Make sure your computer can handle the traffic or pony up some more dollars for bandwidth.
Free Classifieds Blog at 7:50am 9th January 2010 But Magic Jack call quality is terrible.
Dot Come Note at 7:50am 9th January 2010 But Magic Jack call quality is terrible.
thetulsan at 7:22am 9th January 2010 The article is incorrect, it will not make fees 'disappear.' It may enable power users to reduce the number of mins in their plan, but users will still need an active phone number. And if it works poorly or has bad call quality or misses a voice mail who does the customer b**** at? This is a useful device, but not a carrier killer.
Bob at 7:16am 9th January 2010 I have Sprint's AirRave device which costs $100 and $5/month. It essentially is a mini cell tower that connects to my cable modem (router) so I get coverage inside my house. I think the Magic Jack device is similar and that would be bond!!
keith at 5:37am 9th January 2010 I wonder if this will work with tracfone. My friend just paid $200 for a device from verizon that connects his cell phones to a mini tower over his dsl. I believe it still uses his minutes. My tracfone doesn't connect. We are in a hilly area and our houses do not get cell signals but u climb the hills and I usually get good bars.
facebook-503884559 at 9:30pm 8th January 2010 No, it would have to use two or the 800/900/1800/1900 MHz bands that all GSM phones use in order to communicate with them. Far from WiMax.

As far as the iPhone...no it would not be blocked as the MagicJack is not an app for the iPhone. It's a miniature tower that talks to the phone's antenna just like the cell tower does.
facebook-503884559 at 9:30pm 8th January 2010 No, it would have to use two or more of the 800/900/1800/1900 MHz bands [that all GSM phones use] in order to communicate with them. Far from WiMax.

As far as the iPhone...no it would not be blocked as the MagicJack is not an app for the iPhone. It's a miniature tower that talks to the phone's antenna just like the cell tower does.
Farax at 9:18pm 8th January 2010 Isn't it supposed to be Wi-Max? These guys wont get far cos their shit is illegal.
Farax at 9:18pm 8th January 2010 Isn't it supposed to be Wi-Max? These guys wont get far cos their stuff is illegal.
Medisoft at 5:32pm 8th January 2010 I'm SURE the iPhone blocks this...