Remember MagicJack, the USB dongle for your PC that let you make unlimited calls for life? All you had to do was plug it into a PC, then plug a phone into the dongle, and presto… never pay for phone calls again. Not bad for a measly $39.95.
Unfortunately, maybe the promise of unlimited calls for life was a bit overblown. You see, it turns out that MagicJack’s business was dependent on charging access termination and origination charges to AT&T for calls that terminated on the device, or calls made to toll free numbers that originated on the device – a pretty similar model to the free conference calling model. Over the weekend, Andy Abramson spotted a piece on Telecom Law Monitor which reports that the FCC has said that MagicJack’s sister company and the access fee collecting entity, a CLEC named YMAX, had improperly charged AT&T. The YMAX tariff didn’t provide for the types of charges that they were levying on AT&T, which is a strict no-no.
Outcome: YMAX will have to file a new tariff, and AT&T doesn’t have to pay the outstanding bill.
The longer term issue, however, is the future of this business model. The incumbents are all fighting hard to put the free conference callers, and companies like MagicJack, which rely on access termination and origination charges out of business. And it’s working. So how long before the FCC simply decides to move to a bill and keep regime? And how long before MagicJack’s customers launch the inevitable class action suit?