MagicJack/Introduction

MagicJack is a low-cost, consumer-grade voice over IP (VOIP) telephone service. The company is associated with YMAX Corp.. Both were founded by Dan Borislow.

MagicJack is unique the following ways compared to incumbent VOIP providers:

1. Because MagicJack is related to YMAX, utilizes its network and YMAX is a true competitive local exchange carrier (CLEC), MagicJack has a competitive advantage over other VOIP providers. This includes revenue generated by termination fees (paid by other providers for calls terminating at YMAX). But, the most visible advantage is seen in the large number of area codes (and prefixes) available to MagicJack customers.
2. MagicJack's stated business model is to subsidize the cost of its service by collecting details about the numbers called by customers, and selling targeted advertising displayed by the softphone. (After one year there has been no advertising except special offers provided by MagicJack.).
3. MagicJack allows the use of a traditional ( RJ11) handset through a proprietary (supplied) USB device connected to the computer which acts as an analog telephony adapter (ATA).
4. Extremely low price.
5. The first VOIP provider to use mass-consumer advertising via infomercials.

Features

MagicJack costs $1.67 per month (charged annually) for relatively full-featured telephone service. Features include:

• A phone number in your choice of area code (and prefix). Many area codes and prefixes are available.
• Voice mail, always available regardless of whether the customer is using MagicJack at their computer. It will email a .wav file when a voice message is left.
• Relatively unlimited long distance to the US, Canada and Puerto Rico.
• Call forwarding.
• Call waiting.
• Caller ID.
• Enhanced 911 (E9-1-1) service.
• Softphone used with a headset (connected to the computer's speaker/mic connectors).
• The ability to use a traditional handset via the MagicJack USB device, independently of the softphone.
• Optional junk call blocking via a prompt for the caller to enter a randomly chosen single digit before connection.

Be VERY wary of purchasing a MagicJack. They have one of the worst customer service records in the industry. Agents hang up on you if your questions aren't what they want to hear. They take advantage of every dollar they can make off you.

Cost

MagicJack utilizes an annual subscription model. The first year costs $19.99 and is bundled with the required USB device which costs $20. (Total 39.99.). Additional years cost $19.99. It is possible to pre-purchase five additional years at a discount ($11.99 per year).

It is useful to compare VOIP services using a monthly price. However, converting MagicJack's annual price to a monthly rate is complicated by a few factors:

1. VOIP services can end as quickly as they began.
2. MagicJack doesn't give pro-rated refunds for unused time.
3. If the USB device fails, it may be necessary to purchase a new one.
   • MagicJack's warranty of the device appears to be inconsistently applied.
   • MagicJack doesn't sell the USB device separately, it is sold with one year of service regardless of whether you need it.
4. Discounted pre-purchased years which are $1.00 per month. Potentially driving up (or down) the savings.

Assuming the cost of the USB device, 1 year of service, and five additional years purchased at a discount, the following best- and worse-case scenarios can be theorized:

Best case

In the best-case scenario (all goes well for six years): the cost is $1.39 per month.

Worse case

In the worst-case scenario (it fails after 2 months): the cost is $49.97 per month.

For this reason, MagicJack users often refer to their purchase as a gamble (or investment). It has the potential to pay off if things go well. But, it should be remembered that it may not.

Using just one year of service (with the cost of USB device), and if it performs as expected for one year, the monthly price is $3.33.

Excluding the USB device (which could last multiple years), one year of service ($19.99) costs $1.67 per month.

Notes