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

April 12th, 2011 at 9:35 PM

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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