Speaking of Femtocells, Here Comes MagicJack

January 10th, 2010 by · 3 Comments

On Friday I mentioned widespread use of femtocells as a long term wireless replacement.  But today, femtocells are expensive and are marketed by a few large wireless carriers mainly to those with poor indoor cell coverage.  But at the CES show last week we heard the rumblings of change.  MagicJack unveiled an early version of its own femtocell, which they have been working on for a year or two now.  It’s still not for sale yet, but if it’s anything like the company’s consumer VoIP offering then it’s going to make a big splash.  Many people, myself included, underestimated the company’s VoIP effort, but it has turned out to be a very savvy formulation of mass marketing, efficient usage of technology, and regulatory arbitrage.

The idea behind the femtocell device is similar:  plug it into your USB port and you have an instant cell of your own whose range of 3000 square feet should cover most homes.  Presumably you need to set things up first, but your GSM cellular calls then go through the femtocell, down your broadband connection, and out through MagicJack’s network.  The company says it can work with all GSM phones from any carrier (yes including the iPhone), locked or unlocked and on any band.  As always, MagicJack offers the moon but there remain many questions about exactly what they are doing.  Some are about the offering’s full range of capabilities since the device is not really out there yet:

  • If the MagicJack femtocell is not part of your wireless carrier’s network, does that mean it only works on outgoing calls?
  • Do calls made using it appear to come from a magicjack phone number rather than that of your cell phone?
    Does it violate any contracts or user agreements with carriers to use a wireless phone in this way?
  • How is it that MagicJack can make a cheap USB femtocell while everyone else thinks they must sell for $200 or more?
  • Is this just for voice calls, or does wireless data like streaming video and browsing also go through the MagicJack device?

And then their are the strategic questions.  Will wireless carriers love or hate this?  Or both? On the one hand it could help alleviate their straining backhaul networks by moving lots of traffic to copper and fiber.  On the other hand, they have no control over the quality of connections and you know that consumers are going to call the big wireless company for support and not the little interloper known for its minimal support.  For wireline carriers, if this is for data and not just voice, then here comes a new way for people to hog bandwidth!

I suppose we’ll know more when it comes to market.  Until then the uncertainty will keep the buzz going, and if nothing else MagicJack has proven to be masterful at that sort of thing.   Their timing for this offering couldn’t be better though, assuming they do get it out there in the next quarter or so.

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Categories: VoIP · Wireless

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3 Comments So Far

  • carlk says:

    I have been watching this Magic Jack trend unfolding with you for sometime now, Rob. Very effective advertising campaign early on while taking advantage of low ad rates during the credit market upheaval and corresponding explosion that culminated, at least up until now, during the Crash of 09.

    However, there was some negativity with their boxes and encoders with respect to privacy and tracking concerns, if I recall correctly.

    Might you expand upon where they have come from since then, inclusive of their devices and privacy factors today?

    For every good, there may be a corresponding bad, although if the greater good can be achieved, I am all for it. There may even be an “Invisible Hand,” or Adam Smith theories unfolding here. 🙂

  • Andy says:

    Answers to some of your questions here: http://tinyurl.com/yd5xqj6

  • carlk says:

    Danke schon. I was referring more to spyware and their EULA, however.


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