YMax Debuts MagicJack For $20 A Year Calling

By Greg Scoblete -- TWICE, 9/21/2007

New York — Ymax will wade into the near-free telephony market with the MagicJack, a USB device that will enable consumers to make unlimited local and long-distance calls through their PC for $20 a year.

The product plugs into a USB port and automatically installs software onto a PC. Consumers plug their phones (corded or cordless) into the device and can make unlimited calls to landlines and cellphones. The MagicJack is assigned its own phone number and will include voicemail, caller ID, waiting, 911 dialing and FollowMe, which forwards calls to other numbers when the computer is turned off.

The device also loads a softphone application on the desktop if consumers wish to use a headset.

The unit will retail for a suggested $39.95 and include a year’s worth of unlimited inbound and outbound calling within the United States and the features listed above. When the year is up, consumers can renew their license for a $20 a year fee.

The MagicJack can be taken overseas, allowing travelers to make free international calls back to the U.S. The device cannot currently make calls from the United States to other countries.

Ymax was founded by telecom execs Dan Borislow and Don Burns. According to Burns, who serves as CEO, the company can afford undercut competitive phone prices because unlike other VoIP providers, it owns its own CLEC network. “We are a certified exchange carrier in 49 states with 31 switches across the country,” he said.

According to Burns, the company built a large nationwide phone network originally to support a GSM/Wi-Fi phone but decided “it wasn’t ready for prime time.”

That network allows Ymax to offer low-cost calling, Burns said. Whereas other firms, such as now-defunct SunRocket, had to pay CLECs to originate and terminate calls onto the landline network, Ymax only pays to terminate calls and receives a payment on any incoming call to the MagicJack.

“We participated in the SunRocket liquidation until we saw the numbers behind it,” Burns related. Their operating costs per customer per month were prohibitive, he said.

“We were never smart enough to figure out how to make a resale business model work,” Burns joked. The company also differs from Skype and other services that rely on “virtual gateways” because it controls its own physical network, Burns said.

The MagicJack will be in one major electronics retailer by the holidays, Burns said. While it is ostensibly a communications device, Burns said the company thinks of it as a “computer accessory.” “We don’t like the [terminal adapter] model, we think the computer is winning as the home communications hub,” he said.

The softphone software loaded onto the device has a dedicated window where the reseller of the MagicJack can advertise. “It’s a portal for retailers to continue to reach their customers,” Burns said.