Hold on to your hats because MagicJack may be taking us all down a long legal ride which could provide us all with free cell service. Yes, you heard me correctly boys and girls. But before you run out and shout to the world, “I’m as mad as hell, and I’m not going to take this anymore!”, the teleco’s such as AT&T are going to fight this and it may not even get off the ground.

According to a recent article it states the following:

Already being called the “femtojack,” the $40 MagicJack version, unveiled and demonstrated outside this week’s International Consumer Electronics Show in Las Vegas, differs from the other femtocells we’ve seen because it isn’t sold by a wireless service provider. In fact, it’s a bit of a renegade. The Associated Press reports that the device piggybacks on the spectrum that wireless service providers have paid top dollar for – and that there’s little those companies can do about it.

The new magicJack uses, without permission, radio frequencies for which cellular carriers have paid billions of dollars for exclusive licenses. Isn’t that, um, illegal? Dan Borislow, CEO of MagicJack’s parent company YMax told the Associated Press that the new device is, in fact, legal because wireless spectrum licenses don’t extend into the home. Yikes

So how does the work:

The size of a deck of cards, it plugs into a PC, which needs a broadband Internet connection. The device then detects when a compatible cell phone comes within 8 feet, and places a call to it. The user enters a short code on the phone. The phone is then linked to the magicJack, and as long as it’s within range (YMax said it will cover a 3,000-square-foot home) magicJack routes the call itself, over the Internet, rather than going through the carrier’s cellular tower. No minutes are subtracted from the user’s account with the carrier. Any extra fees for international calls are subtracted from the user’s account with magicJack, not the carrier.

There is one issue that needs to be addressed. Only phones that are GSM capable work with the device. These are usually from AT&T, T-Mobile or older Cingular phones with a sim card. Verizon and Sprint phones will not work.

What is interesting is that the folks at MagicJack seem to have found a loop hole in the system. A loop hole that most likely will be plugged by our courts.

But what do you think will happen?

Comments welcome.