What is MagicJack all about?

By Chris McGinn

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The fastest-growing fixed-line telephone company is not AT&T or Verizon.  It's MagicJack.

This pocket-sized device turns your computer into your telephone jack to let you make unlimited local and long distance calls for a fraction of the cost of a traditional phone service.
Try 20 bucks a year or less!

The MagicJack unit -- which was a PC Magazine Editor's Choice -- retails for $39.99 but that includes your first year's service.  You can purchase the item online or at retailers such as Best Buy or Radio Shack. You simply plug the small device into your computer via USB. The program initializes and sets you up with a new phone number based on your geographic location.

You can then plug in your landline phone to the units phone input plug and make your calls via the computer keyboard or onscreen keypad. You can talk using either the phone’s handset or the computer’s built-in microphone and speaker.

The company plans to allow you to transfer or "port" your current phone number for a nominal fee by the end of the year.

MagicJack also offers all your favorite phone features like voicemail, caller ID, call waiting, call forwarding and emergency 911 dialing.

MagicJack is the brain-child of Dan Borislow, who previously ran Tel-Save/Talk America, which provided long-distance service to AOL customers. His latest venture is Ymax Communications, which is the parent company for MagicJack.

Ymax has designed and built the network that MagicJack uses to place its calls. It claims to have more switches than any other telecom company and is the only telephone company certified in all 50 states.

So how does MagicJack compare to other internet phone (VoIP) options like Vonage or Skype?

According to its website, MagicJack is the lower-priced, more services option. In comparison to Vonage, MagicJack says it does not require special equipment and is much less expensive because it does not rely on third-party providers.

MagicJack says it differs from Skype because it uses a dedicated telephone network to make calls rather than a peer-to-peer network as Skype does. Also, Skype charges for calls to non-Skype numbers, a telephone number and voicemail.

In addition, MagicJack now owns SJ Labs, which is one of two competitors that license the software used by most VoIP companies.

Things to consider

While MagicJack may be the greatest thing since sliced bread, it isn't for everyone.

For one thing, while it does provide emergency 911 dialing, your actual response capabilities may depend on your local 911 service. Also, you must register your address with MagicJack and if you move or use the unit in a new place, the 911 system will not have accurate information. Finally, if your power is disabled, your MagicJack will not work.

If you are a DSL customer you might want to check with your internet service provider regarding maintaining phone service in order to use the DSL service.

Another issue pertains to the company's 30-day free trial offer available through its website. In some cases a "hold" was placed on consumer's credit cards causing problems for people who weren't expecting the charge.  According to Borislow, this issue has been resolved and has resulted in higher customer service ratings. By the way, customer service for the site is provided via live chat so don't plan to call and talk on the phone.

Another more serious question is related to security concerns some have about what MagicJack does with the information it gathers from your computer. According to its Terms of Service, MagicJack will provide advertisements based on your calling patterns.  However, it says that it will not provide this information to advertisers or third-parties. A related concern is that there is no uninstall feature with the program, but details are available online via other sites.

MagicJack added two million customers last year so it is definitely on to something and seems to be actively working to address concerns from users.