Game Changer?: magicJack's impending 'femtoJack'

Monday Jun 29th 2009 by Jeff Goldman

A cheap, portable femtocell—with ultra-low-cost VoIP service—could alter the telecomm landscape beyond recognition.

The magicJack USB dongle will soon become afemtocell, according to Nathan Franzmeier, CEO of magicJack sister company Stratus Telecommunications. Within the next six months, Franzmeier says, magicJack will be in production with a femtocell-enabled version—we'll call it the femtoJack—of the popular magicJack device.

The concept, Franzmeier says, is simple. "Let’s say, instead of offering it at $39.95, we offer it at $49.95 or whatever it costs us to put the femto piece in it," he says. "You plug it into your computer, and now when you walk in with your BlackBerry, your iPhone, or whatever it is, that’s your radio tower—so when you make an outbound call from your phone, it’ll go out over the magicJack network, and if somebody calls you on your magicJack number, it’ll ring your cell phone."

While there may be some regulatory issues in the U.S. market, any need to cooperate with carriers could also provide some additional benefits to the consumer. "The carriers that are coming out with femtocells are coming out at entirely different price points, so there's lots of room for agreements with the carriers... and if that happens, then we could do seamless handoff," Franzmeier says.

Although he initially saw femotcells as "just an excuse for the mobile providers to hang onto their subscribers," Franzmeier says he’s since realized that "there are some disruptive things you can do there… it allows us to utilize people’s handsets as a VoIP phone with no change in perception from them. They just start using it like they would their cell phone, and suddenly their cell phone isn’t a cell phone: now it’s a VoIP phone."

The point, Franzmeier says, is that it no longer makes sense to look at VoIP simply as a standalone technology: it’s now become part of a larger set of solutions, accessible in a myriad of ways. "The technology behind the transport doesn’t really matter—whether it’s GSM to the femtocell that turns into VoIP to go into the network and becomes SS7, the VoIP piece is just a bit of technology," he says.

And adding a device like the femtoJack to the mix, Franzmeir says, can make it much, much cheaper to ensure broad coverage. "If ten people in my office have the device, I’ve effectively covered the office with a cell network that didn’t cost very much," he says. "Say it was a $40 device—for $400, that’s covered my entire office, and all of us can use our cell phones with no air time."

The larger aim, Franzmeier says, is to get to the point where "voice just becomes another way that I communicate with people over the data network—so if I want to text, I can text; if I want to shoot videos over it, I can do videos; if I want to speak and do those at the same time, I certainly ought to be able to do that. That’s what our company is focused on enabling."

Of course, it’s not just about office deployments: the same kind of system can also be enabled on a laptop with a data card. "If I’m connected to AT&T, and AT&T says, ‘I still want to charge you $300 a month for all the services that I give you,’ I’m going to be very incented to go with the $50 all-I-can-eat data plan from T-Mobile or whoever, with a femtoJack—put one in my car, one in my office, and suddenly my minute charges are down, and I have control over it: I can run whatever carriers I want," Franzmeier says.

At that point, a given consumer’s choice of mobile carrier becomes less and less important. "If what happens in the ISP space happens in the mobile data side of the world, then we’ll have all sorts of ways to get onto the Internet… and it seems to me that’s where it should go," Franzmeier says.

And then there’s no need to use anything other than a mobile phone. "My kids have already made the transition," Franzmeier says. "The only person who uses the landline in my house is my wife. Everybody else, they’re sitting on the couch ten feet away from the landline talking on their mobile phones—and as fast as we can get the femtoJack in there, they’re going to be talking over my femtoJack."

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