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MagicJack meets cell tower as 'femtojack'

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(Read caption) magicJack CEO and founder Dan Borislow holds up a new magicJack at the Consumer Electronics Show in Las Vegas on Thursday. The new version allows users to make free cell phone calls from the home.

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It's not often that an infomercial product makes its way onto the pages of the Monitor's Horizons blog, but today is a special day. We're not going to be praising the Shamwow for its prowess at cleaning up spilled LAN party Mountain Dew, or revisiting the Weezer Snuggie as an economical alternative to USB-powered space heaters. Instead, we're taking a look at the revamped MagicJack.

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As first reported Wednesday by SiliconAngle, MagicJack, the device that promises next-to-free long-distance calls by creating a way to plug landline phones into Internet-connected computers, is set to release an updated gadget that will do the same trick for wireless phones, conserving costly monthly minutes. Sound familiar? It's not unlike the femtocells we talked about in January and September of last year.

Already being called the "femtojack," the $40 MagicJack version, unveiled and demonstrated outside this week's International Consumer Electronics Show in Las Vegas, differs from the other femtocells we've seen because it isn't sold by a wireless service provider. In fact, it's a bit of a renegade. The Associated Press reports that the device piggybacks on the spectrum that wireless service providers have paid top dollar for – and that there's little those companies can do about it.

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

Isn't that, um, illegal? Dan Borislow, CEO of MagicJack's parent company YMax told the Associated Press that the new device is, in fact, legal because wireless spectrum licenses don't extend into the home. Yikes.

Now the fine print: Not all cellphones will work with the new device. The "femtojack" works only with GSM devices, which, in the US, means ones likely signed up with AT&T, T-Mobile, or the now-acquired Cingular – phones with a SIM card slot. CDMA-based phones sold by Verizon or Sprint aren't compatible. Mr. Borislow has said that he expects most people to use their MagicJacks with older GSM phones that they may have upgraded from, according to PC World.

Will it fly?

On one hand, this new MagicJack device seems like just another way for people to use VOIP, but from their cellphones. But the unauthorized use of paid wireless spectrum – especially as companies like AT&T struggle to keep up with bandwidth demands from paying subscribers – would seem to put YMax on a collision course with wireless service providers' legal departments.


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What's your take? Leave a comment below, and find us on Twitter to join the conversation – we're @CSMHorizonsBlog.