Simply, the MagicJack USB Device is a phone jack that allows you to make unlimited local and long distance calls in the US and Canada. You get a phone number based on your area code, and you will need the following to make the Magic Jack work:

1. Any desktop or laptop computer with Windows XP, Vista or Intel Based MAC operating system;

2. One of the following kinds of connections: broadband, high-speed internet, cable internet, DSL, WiFi or WiMax; and

3. Your present corded or cordless telephone (you can also use a headset or your computer's microphone and speakers)

That's it! You plug in the small device to your computer and software automatically installs. Just plug your phone into the phone jack and you are ready to make calls. You pay a one-time fee of $39.95 for the device and a YEARLY fee of $19.95.

MagicJack USB Deviceis a $40 appliance that's about the size of two USB memory sticks. You plug any analog telephone into one end, and insert the other end into the USB port of a computer with broadband access. After waiting about one minute while the device self-installs, you can make free calls to any phone in the United States and Canada (no matter where in the world you are) and there are no per-minute charges. After the first year, you pay $20 per year for these calls.

MagicJack USB Device for calls to phones OUTSIDE the U.S. and Canada vary from 2 cents per minute to landlines in the U.K., Germany, and France up to $1.21 per minute to Antarctica, according to a list posted by YMax, MagicJack's parent company. Service to these countries at these rates will reportedly begin in early 2008. If the international party you are calling also has a MagicJack, the call is free.

Except for a desktop shortcut, MagicJack installs no software on the host computer. This allows the device to work on PCs at Internet cafes that don't permit the installation of executable files.

You do have to wait 30 seconds or more for the software to load from the device each time you plug it in. But the great benefit is that you can easily take this pocket-sized product with you to use on a laptop in hotels or wherever you may find broadband access. Currently, only Windows XP and Vista are supported, but a Mac version is going to be available.

For home use, the product has an analog phone jack, into which you can plug any ordinary telephone, corded or cordless. For travel, MagicJack works with any standard headset and microphone, including any that may be built into your laptop. Bluetooth headsets are also supported.

For incoming calls, U.S. customers currently receive a free inbound phone number. You can choose from 116 area codes in 31 cities. That sounds like a lot, but still includes only 23 states. Los Angeles is a major metropolis that's notably NOT available from MagicJack's service, but a company representative says L.A. area codes should be available by Dec. 25. A list of the currently available area codes is posted on the MagicJack USB Device site.

You dial calls using MagicJack's on-screen softphone or the buttons on an ordinary telephone that you plug into the USB device's RJ-11 phone jack.

Eventually, you'll reportedly be able to use MagicJack's site to change your phone number and even port your own, existing land line phone number (for a fee). Those features, however, are not yet available.

The sound quality on MagicJack USB Devicephone calls are very clear. Every call, however, brings up the on-screen soft phone window with its built-in advertising pane on the left, even if you're using a regular phone for dialing rather than clicking the on-screen buttons with your mouse. (See Photo Below)

MagicJack USB Device features include:

1. Free directory assistance using the Free411 Web site (in our tests, this site performed poorly at finding business phone numbers, so you get what you pay for);

2. Free 911 service in the United States (you enter your physical address once, which you can change at any time);

3. Free voicemail (even if your computer is off); and

4. Free call forwarding to your cell phone or any other phone.

The 911 service requires not only that you enter your current address, but also (as with any MagicJack call) that you have power and a working Internet connection so you can dial the number.

If you use Microsoft Outlook, you can also download a plug-in that adds a toolbar to that program for one-click dialing of a selected contact.

Perhaps the most similar product to MagicJack USB Device is the V-Phone from Vonage. This USB device is the size of a typical flash drive and includes an audio jack for the included cell-style headset (earphones and microphone). Like MagicJack, you plug a V-Phone into a computer with Internet access and, after about 30 seconds of setup, begin calling. You dial out using the on-screen keypad (which is optional in MagicJack). An incoming phone number is included. Like MagicJack, you get voicemail, a call log, and a contact list.

Compared to MagicJack USB Device, however, the V-Phone rates are astronomical. Vonage's cheapest billing plan (see Table 1) costs $180 USD per year for 500 minutes per month. Unlimited calling is available for residential users for $300 per year, while businesses pay $420 per year. The fees include all calls to the U.S., Canada, and a few European countries.

Skype, on the other hand, does not include any hardware. It's free software that you download and install on your computer. The software includes instant messaging and file transfers, but to make VoIP phone calls, you'll also need a Skype-compatible headset.

Skype charges $30 a year for unlimited outgoing (SkypeOut) calls to the U.S. and Canada, plus just over 2 cents a minute for calls to 30 selected countries, more to others.

To get a number for incoming calls, the SkypeIn service costs $18 for three months or $60 per year, a price that includes voicemail and call forwarding. (You can also buy up to 10 phone numbers using most U.S. area codes, as well as those from some other countries.) By contrast, if you have MagicJack service, incoming calls are free.

MagicJack USB Device is cheaper than similar services.

Is MagicJack too good to be true?

With rates as low as those offered by MagicJack, how likely is it the service will survive in the long haul? That's an open question, even for telecom experts, some of whom don't expect any VoIP service to last for long. But MagicJack's business model does offer some advantages that aren't found in its competitors.

MagicJack's parent company, YMax - founded by telecom veteran Dan Borislow - is itself a CLEC that's certified in 49 U.S. states (soon to be 50). Because the company owns much of its own switching and gateway hardware, YMax can make money by giving out phone numbers and leasing the lines it owns to other VoIP and telecommunications providers.

This infrastructure also gives the company more control over voice quality, asserts MagicJack USB Device marketer Don Bruns in a recent issue of TelephonyOnline. Founder Borislow echoes this point in a Broadband Reports article.

In addition to sales of the MagicJack hardware (and the $20 annual fee starting one year later), MagicJack intends to sell advertising that will appear next to the on-screen softphone any time you use the product. Indeed, as an article on the Broadband Reports site points out, MagicJack's Terms of Service document goes so far as to state that "these advertisements are necessary for the magicJack device to work."

Whether this business model is sufficient to make MagicJack a viable, long-term success, only time will tell. In the meantime, consumers can take advantage of MagicJack's low rates and portable calling convenience wherever a computer and a good Internet connection can be found.

1. How do people call me? You get a phone number assigned to your MagicJack USB Device account based on your area code.

2. Do I have to dial any extra numbers with Magic Jack? For long distance calls, simply dial the other party's 10-digit telephone number. You may have to dial 10-digits for local calls in some areas.

3. Are there any hidden fees or extra costs? No. The only other expense would be from international calling. This requires the purchase of pre-paid calling minutes from our website.

4. How do I get 911 Emergency Service on MagicJack?

1. Register your current US address during the registration process.
2. Please make sure that your address information is complete, up-to-date and accurate. (If you travel, you must update your 911 service address.)
3. Wait for a confirmation email that your 911 service address is registered. Dial 911 only in an emergency. Our 911 service is different than 911 service offered on traditional phone lines.

5. Do I receive a record of my long distance calls? No, you will not receive a record of long distance calls, as all (available) long distance calls are free!

6. How Do I Get Started? Just Click on MagicJack USB Device and get started saving money.