FCC rules against magicJack; cuts into revenue stream [video]

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Last week, the FCC ruled in favor of AT&T in a complaint it filed against VoIP home-phone service provider magicJack. For those of you that don’t own a television, magicJack advertises — relentlessly, via infomercial — that its VoIP service will provide unlimited calls to the U.S. and Canada for just $19.95 per year. Users are instructed to plug the USB dongle (pictured above) into their computer, connect any touch-tone phone to the dongle’s opposite end, and start dialing. AT&T has, however, taken exception to one way in which the company generates revenue and keeps consumer costs down. The U.S. wireless carrier’s gripe stems from the fact that magicJack, through its subsidiary YMax, has been charging “call termination fees” when its customers make calls to AT&T customers or AT&T owned toll-free numbers. The FCC has rendered a decision, and found that magicJack is not entitled to these fees. “While the ruling applied specifically to Ma Bell, you would think other carriers would follow the ruling and stop paying those same fees to YMax, which as the FCC ruling notes generates basically all of its traffic from magicJack users,” writes Forbes‘ Eric Savitz. The company has yet to publicly comment on the government body’s ruling. In the meantime, hit the jump to check out one of those awesomely bad infomercials we mentioned

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18 Comments
  • sirpaul

    I love how the CNBC quote has a spelling error. “alot” is not a word. It’s “a lot”.

  • http://twitter.com/zc456 Squeaks

    “Gonna hear alot a lot about it!” Haha, no joke. Never did trust magicJack.

  • craigen

    Isn’t it nice to have (again!) confirmation of the corruption of your government and how it is in the pockets of the major corporations? Americans! YOU DESERVE WHAT YOU GET!

    • Anonymous

      Isn’t it nice to have (again!) confirmation that few people actually read the source material? Or was your post just standard rhetoric that you feel applies regardless of the actual content?

  • Anonymous

    if Billy Mays didn’t endorse it, it’s not legit

    RIP Billy!

  • Uncle-Ernie

    Give me Magic Jack or give me death!

    • Wappa1

      TO HELL WITH AT&T…Give me MagicJack. To HELL WITH FCC for sticking their noses in a very affordable Device.

  • RonCouch

    Magic Jack has been my phone for years. AT&T has been busy buying everything in sight. They
    won’t stop until they have a monopoly again and can rip us off.

  • guest

    I’ve had magic jack for a year and it’s wonderful.

    • Norma Spitz

      Magic Jack + BGR = massive tool

  • Anonymous

    Some ignorant writer may not like the commercials but the product, majicjack, works wonderful. I’ve had mine for 2 years and I like it. Go to your favorite retailer, pay 39.95 plus tax for the plug in plus a years phone service, then it’s $19.95 a year after the first year.

  • RH

    Everyone thought google was skynet? Soon as at&t figures out how to buy up verizon, ma-bell will be back, and boy will she be pissed!

  • Anonymous

    Magicjack sucks. I can’t wait for them to jack up the prices on their service. It’s pretty scummy of them to finance their business model from other companies.

  • Stephen

    “YMax, has been charging “call termination fees” when its customers make calls to AT&T customers or AT&T owned toll-free numbers”

    Isn’t it the other way around? Call termination charges are occurring when AT&T customers call a Magic Jack number.

  • Peterpops18

    In my opinion, they’re trying to ban it due to the number of people who send these little devices oversees giving local numbers to family members in other countries so they can talk internationally for a small rate per year versus the arm and leg AT&T will charge.

  • Mythicalcesar

    I’ve had a Magic Jack for over 2 years now and it has given me a home phone when I needed it. I bought it because I didn’t want to pay $20 a month for AT&T or Comcast’s phone. Oh yeah, and you can take it with you and use it on your laptop if needed. I had to do this once when my phone died and I was in a hotel that charged for long distance, but gave free wifi.

    I do have a cell phone and I use it as my primary phone, but I don’t think you can beat 5 years of service for $60.

  • omen

    I like the fact that I can use my magicjack to call home when I’m out of the country for no extra cost.

  • Greenlantern

    This will simply make Magic Jack pay their own way.  They’ll likely begin charging a monthly surcharge, add advertising to calls, or just go out of business.

    Ooma had a similar business model, selling their device for a “1 time” fee of $249.  But Ooma has already started adding per minute surcharges each month.

    Better to just use an honest VOIP company like voiSip ($5.99/mo) or even Vonage.

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