Told them it was illegal per FCC and misrepresentation per FTC. My chat transcript portions:

Dexter: It was stated in our Terms of Service at http://www.magicjack.com/tos (Number 3 – B and Number 4). Some restrictions in cost prohibitive areas may apply. You will not have the ability to call any number that would require the addition of any charges to your phone bill, such as 900 or 976 numbers or any other “fee per call” type service..

Mo: Do you or your supervisor know about FCC regulation “22 FCC Rcd 11629 (2007)”

Dexter: As per Terms of Service you have agreed upon registration : Section IV :

Dexter: We may require prepaid purchase and/or we may charge you for calls to conference lines, platforms and certain non-ILEC area calls, or any call wherein we incur a cost from another carrier. We may provide for a fee, premium prepaid services, which may be powered by YMAX Communications Corp. (YMAX), and may include some inbound, international, conference, platform and outbound calls that receive a recording and certain calls to non-ILEC areas, and the rates for those services will be governed by listed price lists or tariffs.

Dexter: If you hear that message : ” To call a cOnference Line, you must purchase international minutes…”, this means that the Number you are calling is on non-ILEC areas where they are not Allowing magicjack calls for free.

Mo: This is not cost-prohibitive area, it is not a 900/976 number, and it is not fee per call type service.

Dexter: We regret to inform you but the other end has blocked us from reaching them and we are already working on the Agreement.. I fervently wish too that the free calling will be agreed once again.. However, they are now blocking it.. In the mean time, you may able to reach them by having International minutes..

And of course, this comment doesn’t even begin to address the issue of callers who may not be able to reach our conferences for the same reasons from other networks…

Anyway, the workaround is to forward my cell phone to the conference call number, call my cell from the magicjack line to connect the call, then turn off forwarding on my cell. The minutes probably get counted on your cell phone bill, so if that’s a concern you’ll have to consider that. It does seem to work though so I can use my land phone which is more comfortable for me.

Anyway, MagicJack can “terminate” calls in one of two ways: direct connections with providers at negotiated rates (which could be zero cents per minute) or going through the PSTN infrastructure at large and paying X amount per minute, which is determined by the phone company in question and is generally published in annual Public Service Commission reports. If voice interconnection/peering is established, MagicJack (or whoever) sets up a SIP, digital or analog connection (probably SIP or ISDN digital) connection between itself and the other carrier, and they either keep track of minutes and bill for the difference between inflow and outflow, or they open up the pipes and let the telephone juice flow for free.

Now some areas are harder to wire than others; so some carriers Prural ones) charge higher interconnection fees per minute than others. That’s all well and good because a national company like MagicJack doesn’t have a ton of people making calls to/from those areas, because that’s not where the population centers are.

The problem arises when free conference calling services game the system, contracting with a CLEC that will provide them with a block of inbound numbers, then splitting the interconnection charges with the CLEC when people call in to the “free” cnference call line. Adding insult to injury, sometimes these CLECs jack up rates even more to these conference call providers (more money is always good, right?) to the point that MJ is paying over ten cents PER MINUTE to connect a conference call that will have multiple participants and will last quite awhile…on a rather popular system to boot. The result for the conference call company and CLEC is they may be making as much as a dollar or two per minute on a service that doesn’t require miles of rural phone lines or any of the other LEGITIMATE reasons for a high termination charge.

I’m looking at a VoIP provider’s rate sheet right now that lists out charges to connect to a given area code/prefix combination. Standard rates range from half a cent to a couple of cents per minute, depending on how rural the area in question is. So far, a couple of numbers in teh 218 area code, including 218-338, are the ONLY ones I’ve seen that go above 20 cents per minute (not 2, TWENTY). It does NOT take twenty cents per minute to run a line from the telephone central office to wherever the conference call system is collocated. No freakin’ way.

The 916-233-0500 number…well, I don’t know what’s up with that. Its termination rates are as low as anyone’s. Could be something anticompetitive, but the 218-339 number…yeah…

MagicJack’s own conference number on the other hand is higher than zero for termination rates (or half a cent) but still reasonable (in the neighborhood of a penny per minute).

So you might be wondering, might these high termination rates put some other rural subscribers out in the cold? Actually, yes. MagicJack won’t complete calls to high-cost exchanges; the nearby Paul Bunyan Telephone Cooperative (5.6 cents per minute on my rate sheet) comes back as “service unavailable” when I try to call it, as do numbers from BPS Networks in Missouri. That said, both companies aren’t exactly cheap to call to, and if you have a MagicJack then you have an internet connection, and if MagicJack works, so will another VoIP company that will allow you to connect to those numbers.

Also, not all rural telcos are blocked. Both telephone cooperatives in my area (central TX) work just fine with MagicJack. Maybe there are some telephone co-ops that don’t work near where I live, but I haven’t found them yet.

The crux of it all is that, if MagicJack connected calls to high-cost markets, they would have to raise their yearly rate. If anyone is okay with them doing that, go to NetTalk…unless they block those numbers as well. You can only do so much with a buck and change per month, and if a rural telco eats that up with one call…or a big