MagicJack says it can provide GSM femtocells in the home without agreements with AT&T and T-Mobile: This is one of the most audacious and fascinating attempts to work around spectrum rules that I've seen since Vivato convinced the FCC to tweak the point-to-point power limit rules for phased-array devices.
MagicJack currently offers a VoIP service using a tiny plug-in device that costs $40, including a year's unlimited calls, and $20 for subsequent years. MagicJack pulls off this trick by being affiliated with a CLEC (competitive local exchange carrier), which allows it to benefit from call completion fees (paid by other carriers whose customers call MagicJack customers) and integration.
The femtocell MagicJack is altogether different. Using very low power, the femtocell will act as a GSM base station, and phones will connect to it to complete calls over a broadband Internet connection in the same way that the wireline adapter works.
The snag is that MagicJack doesn't have agreements with any US GSM providers, such as AT&T and T-Mobile, the two largest. Instead, it's asserting a couple of different doctrines of non-interference and, Kevin Werbach suggests, the constitutional right to be free from unreasonable searches and seizures.
MagicJack believes that by only using the femtocell in a home, and not interfering with carriers' outdoor networks, that there's no conflict with the FCC licenses that carriers have paid for. I first thought this was ridiculous, but now think there's a case to be made that could disrupt calling plans in the same way as T-Mobile's UMA handset service for unlimited domestic calls over Wi-Fi.
It's one thing for MagicJack to assert these rights, another to get FCC approval. IDG News Service reports that the FCC has no application yet and MagicJack confirms it hasn't submitted one. The FCC tests for certain kinds of rules compliance, and thus is unlikely to block device certification. However, carriers may file FCC complaints once the product is officially out to prevent its use and tie up the product for years under a restraining order or a similar mechanism.
It's a crazy idea, but also clever.