Everyone wants free phone

The company behind the magicJack, the cheap Internet phone gadget that's been heavily promoted on TV, has made a new version of the device that allows free calls from cellphones in the home, in a fashion that's sure to draw protest from cellular carriers.

The new magicJack uses, without permission, radio frequencies for which cellular carriers have paid billions of dollars for exclusive licenses. Apparently the device is legal because wireless spectrum licences don't extend into the home.

YMax Corp. will start selling the device in about four months for US$40, the same price as the original magicJack. As before, it will provide free calls to the U.S. and Canada for one year. The original magicJack is available in Canada.

The new device is, in essence, a very small cellular tower for the home, also known as a femtocell.

The size of a card deck, it plugs into a PC via USB, which needs a broadband Internet connection. The device then detects when a compatible cellphone comes within 2.4 metres and places a call to it. The user enters a short code on the phone. The phone is then linked to the magicJack and as long as it's within range (it is claimed to cover a 280m2 home) magicJack routes the call itself over the Internet, rather than going through the carrier's cell tower. No minutes are subtracted from the user's account with the carrier.

Any extra fees for international calls are subtracted from the user's account with magicJack instead.

According to YMax CEO Dan Borislow, the device will connect to any phone that uses the GSM standard, which in the U.S. includes phones from AT&T Inc. and T-Mobile USA and in Canada includes Fido / Rogers. At a demonstration at CES, a visitor's phone with a T-Mobile account successfully placed and received calls through the magicJack.

5 million magicJacks were sold for land line phones in the last two years, and roughly 3 million are in active use.