MagicJack Home Mini Cell Tower — Advantages Overstated?

There’s a lot of buzz being generated about the MagicJack home cell tower gadget (femtocell) being demoed at CES. There’s also a lot of misinformation and confusion about the device. This post clears up some of the misinformation and confusion. Ultimately, it appears that many of the advantages of the MagicJack femtocell are overstated.

What is the MagicJack “femtocell” home mini cell tower?

It is a small device that plugs into a computer’s USB port, receives a dialing signal from a cell phone located within 8 feet of the device, connects to a local cell tower and then switches the call from the local cell tower to a VOIP call transmitted on the MagicJack system, the same VOIP system as that the original MagicJack uses. After a call connects, the MagicJack femtocell would have a range of about 3,000 feet.  The MagicJack femtocell is being touted as a legal way to make air-time free calls from your cell phone. Like other femtocells, including those offered by cell carriers, someone with a weak cell signal in the home could experience better call quality or fewer dropped calls, if the VOIP transmission is better or more reliable than the cell transmission.

Which cell phones work with the femtocell?

GSM phones only, according to most reports.  AT&T and T-Mobile phones would likely work but Verizon and Sprint CDMA phones would not work with the version of the MagicJack femtocell being demoed.

How much will it cost?

$40 for one year of service, which includes unlimited calling in the U.S. and Canada.

When will it be available?

In about four months.

Analysis and Concerns…

1. Questionably legal.  The FCC is reviewing the legality of a 3rd party femtocell not provided by the cellular carrier (some cellular carriers sell their own femtocells which usually run around $200).  If the FCC gives its blessing on the MagicJack femtocell or concludes that it fits within the spectrum laws, then I predict that cell carriers will simply cook into their contracts provisions that prohibit the use of 3rd party femtocells (like prohibiting TetherBerry on Blackberry phones).

2. Unless it has improved markedly in the past two years, the MagicJack VOIP network is spotty. I received repeated bursts of static using a traditional MagicJack.

3. Consumers would only achieve cost savings under two scenarios. First, the consumer exceeds his/her minutes and thus is able to reduce the overage by VOIPing some calls. Second, the consumer VOIPs enough calls to reduce his/her monthly allotment of minutes and incurs a lower monthly cell phone charge.

4. According to some reports, the service requires a MagicJack SIM card inserted into the phone. While this isn’t a big drawback for users who don’t need to insert SIM cards for other reasons (international roaming or switching networks), it may detract from the appeal of the MagicJack femtocell.

5. The advantages are somewhat overstated by some bloggers and commenters. You can use a traditional MagicJack for unlimited VOIP at the same price. The primary advantages of the new scheme are using the same handset for your VOIP and cellular calls and consolidating your VOIP and cellular calls to one phone number (the latter of which you can do with Google Voice too, a free service).

6. Consumers with with friends-and-family plans or pick-any-10 or the like can effectively make unlimited cell calls for free by adding a Google Voice outdial number as a airtime free call.

7. Google acquired a VOIP company in Q4 2009. When it slaps that together with Google Voice and enables number porting, then many of the purported advantages of the MagicJack femtocell will be available through Google and, most likely, for free.

I suppose the good news is companies are getting creative about ways to reduce communications expenses, particularly cell phone bills. If Google Voice rolls out VOIP too, perhaps the bottom will fall out of the cell phone companies sooner rather than later.

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