YMax, the parent company of magicJack has been a little busy in 2010. They started the year off at the Consumer Electronics Show touting a forthcoming magicJack femtocell, to much fanfare. Then legality questions began to surface about the magicJack femtocell riding the leased spectrum of other carriers. There was also that minor merger with VocalTec which made the company behind the magicJack a publicly traded one with a market capitalization of about $300 million and projected 2010 sales of $110 to $125 million.
That brings us to today, where the magicJack femtocell is now on hold with attention now turned to a new completely free calling service magicTalk. The AP reports that magicTalk is a new softphone offering by VocalTec (formerly YMax) which will be offered on PCs, smartphones, and tablets. The service is somewhat similar to Skype’s voice service, but unlike Skype, magicTalk subscribers can call anyone domestically for free. With Skype, calls outside of their network incur a fee.
The business model for magicTalk is an interesting one. Since VocalTec operates a VoIP network, they intend to generate revenue through intercarrier compensation and access revenue generated by terminating calls to magicTalk and magicJack phone numbers (I presume anyway, based on the AP report). “The reason the calls can be free is that VocalTec operates as a phone company, so it can charge other phone companies for calls placed to magicTalk and magicJack numbers,” reports the AP. So let me get this straight – the magicJack company intends to make money off of access. Anyone else see the irony here?