Regulatory Issues

by root on Regulatory Issues, VoIP

Unraveling The Inner Workings Of magicJack (Winter, 2010)

Hello, and greetings from the Central Office! I’m currently over the North Pacific winging my way back to Seattle. I now know the price of tea in China, the breeding cycle of the giant panda, and just how crazy payphones can get. In fact, you may see some interesting Chinese payphone pictures in an upcoming issue of 2600.

When preparing for my trip to Sichuan, one big consideration was how I’d call back home. Land lines are available and payphones are plentiful throughout China, but costs are very high using US-based calling cards (anywhere from 50 cents to $1 per minute). Slightly more reasonable rates are available using Chinese GSM carriers, but rates still average 20-50 cents per minute. Meanwhile, VoIP is very cheap, weighing in with prices as low as … well, free. That’s what MagicJack advertises, which deserved a closer look.

Of course, it’s not really free, but the promise is tempting: for about $40, you can simply plug in MagicJack and make calls anywhere in the US or Canada for free. Call as long as you want, anywhere you want, for an entire year. Better yet, each subsequent year costs only $20. The product even includes free voicemail and you can select phone numbers in whatever market you like nationwide. And best of all, no fiddling around with headsets or microphones on a computer; just plug one end of the MagicJack into your computer’s USB port, and then connect the other end to an ordinary telephone set. Heck, it was even endorsed as the 2008 PC Magazine product of the year! What could possibly go wrong?

Error screen image 

Well, if you have to ask that in the telecommunications business—especially where VoIP is involved—you probably haven’t been around it for very long. VoIP is a very complicated business, and MagicJack fails to unravel its complexity. In fact, it introduces some complexity of its own. Phone numbers in whatever market you like? Well, you may get one in the same LATA, but the end office might be a toll call to virtually everywhere. Call anywhere you want? Sure, as long as the number isn’t blocked by MagicJack (as many Iowa-based teleconference services are). Make as many calls as you like? Yes, as long as you call fewer than 60 unique numbers per day. When you install the software, the End User License Agreement (EULA) has a few very nasty surprises. And as for that PC Magazine Product of the Year endorsement (which MagicJack still advertises), PC Magazine rescinded it—something never before done in the history of the magazine.

There are four distinct components of MagicJack:

Hardware. This is made by TigerJet, a manufacturer of VoIP hardware. The TigerJet integrated chipset provides a USB audio controller, which serves as the interface between your telephone set and the computer. It also provides a CD-ROM USB device, which is used to install the MagicJack software.

Client software. Written by SJ Labs, this provides a SIP/RTP “soft phone.” It uses the CPU of your computer to encode and decode your conversations, and referencing an index of gateway servers, it uses your Internet connection to reach MagicJack’s SIP/RTP gateways. The software also logs your phone calls, sends information about you to Google, and serves advertising.

Middleware. Provided by stratus.com, this software runs on MagicJack gateway servers. These are numerous and located throughout the country with reasonable proximity to MagicJack rate centers. This software provides encoding and decoding of SIP/RTP conversations on the server side, and also provides an SS7 interface to the PSTN. SIP servers appear to run on Linux, and Asterisk appears to be the switching platform. RTP servers appear to run on OpenVMS for HP Alpha.

CLEC. MagicJack is a wholly owned subsidiary of YMAX Communications Inc., a fully qualified CLEC in all 50 states. This is the ace in MagicJack’s sleeve, and appears to make possible (albeit with razor-thin margins) unlimited calling to anywhere in the US or Canada.

Installation

MagicJack software is available for both Mac and PC. I tested the PC version. Although this is supposed to be a “plug and play” installation experience, it doesn’t work if you have autoplay disabled in your operating system. To install the software, I had to hunt through the root directory of the virtual CD-ROM device (which contains a file called DO NOT USE THIS DRIVE) to find the setup files.

Running the installer downloads the latest installation files from the MagicJack site and starts up the soft phone. This allows immediately making 30 minutes of calls (over a 48 hour period) prior to registration. After you’ve reached either threshold, registration is mandatory. In this “demo” state, 800, 888, 877, 866, 500, 900 calls are blocked, as are international calls (except Canada) and calls to directory assistance.

Registering requires the following information, which is nearly as much as I need to do my taxes:

  • Your email address
  • Your street address.
  • The type of internet connection to be used.
  • Information on what type of television service you have (dish, cable, or neither) – presumably for marketing purposes.
  • Accepting the terms of service.
  • To make outgoing calls, you have to select an “I elect to accept free outgoing service (recommended)” button. It’s not clear why this is here, but it’s probably for legal reasons. MagicJack also attempts to upsell you to a vanity number ($10 per year) or a vanity last 4 digits ($3 per year). (Fig. 2)
  • You can then select a number. As of this writing, Seattle numbers were not available. In the 206 area code, only Vashon numbers were available. Vashon is an island. You have to ride a ferry there, and the island is located 30 minutes away from Seattle or Tacoma. It’s also not a local call to anything except itself and downtown Seattle.
  • MagicJack then offers insurance for $1 per year. The insurance covers damage to or failure of your MagicJack hardware, but whether MagicJack replaces your hardware is in its sole discretion. I declined.
  • MagicJack then attempts to upsell you to 5 years of service for $59.95. This equates to an additional $15 per year (sneakily, MagicJack isn’t selling a 5 year extension to what you already purchased, they’re selling a 4 year extension).
  • If you decline that, you’re offered a 1 year extension of service for $19.95. This is the same as the normal renewal price.
  • You are then offered pre-paid international calling in the $10, $20 or $40 increment.
  • Finally registration is complete. Your number is issued. I got a number ending in 666. One evening when I’m bored, I’ll contact customer service to find out whether I can get a number that doesn’t contain the Mark of the Beast. I’m sure the results will be amusing.
MagicJack upsell screen shot

MagicJack never misses an upsell opportunity

After registering, I received two email messages. The first was a 911 disclosure. It basically says that MagicJack will try to connect 911 calls, but they’re under no obligation to do so and they will only send 911 whatever information you provided at sign-up (which may not be your actual location). I also received a verification email. Clicking on the verification email specifically allows MagicJack to spam you per their Terms of Service.

Once installed, the softphone cannot be uninstalled. Yes, you read this correctly, even if you return the MagicJack the software will remain on your computer, tracking your activity and displaying ads forever (or until you track down and eradicate every piece of it).

Using the software

Once installed correctly, making phone calls is as easy as picking up the phone and dialing. That is, as long as the ports the soft phone uses are open, and as long as it’s able to communicate with the MagicJack SIP and RTP servers. There are a few additional technical requirements that are unlikely to be met on many consumer PCs, leading to a complicated and frustrating troubleshooting experience with MagicJack’s unhelpful customer service (they communicate with you only via Web chat, and generally provide canned answers that don’t apply to your problem).

While running, the client software handles SIP/RTP in the background. The SIP credentials use a salted hash password, which means that it could be cracked via dictionary attack (this could allow you to, for example, clone your MagicJack account to a SIP ATA). The client also displays advertising and secretly sends information about you to Google via the 1e100.net domain. “Don’t be evil,” indeed.

The user interface allows selecting between normal broadband connections and high latency, slower speed aircard connections. Normal broadband connections appear to use the GSM codec, while aircard connections use a poorer quality (but lower bandwidth) codec.

Obviously, as a phreak, I tested the entire dial plan. Here are my observations:

  • Voice quality ranges between poor and terrible. Folks, for $20 a year, you get what you pay for! It’s too poor to pass DTMF in most cases. The quality is also too poor to maintain a data (such as fax or modem) connection, making for a frustrating experience sending faxes or calling dial-up BBSs.
  • As compared to other VoIP services I tested, Skype, Gizmo5, IPKall, and Google Voice all provide a markedly superior VoIP experience. In my market, MagicJack quality is so poor that the service is virtually unusable.
  • Disconnected numbers ring indefinitely and then go to reorder. No SIT tones and no recording, so it’s really difficult to know what went wrong.
  • ANI and Caller ID do pass correctly.
  • Either 10 or 11 digit dialing goes through, but 7 digit dialing is not allowed.
  • All circuits busy recordings are played.
  • Calls to numbers that don’t supervise go through, and they even send forward audio.
  • Calls to Canada and the US are free, including Alaska, Hawaii and Puerto Rico. However, USVI isn’t considered domestic and isn’t allowed without purchasing international credits. Guam and the Commonwealth of the Northern Mariana Islands are also considered international.
  • Calls to 800/888/866/877 numbers go through without issues. However, calls to UIFNs fail without any international calling credit. I’m not sure whether they go through or bill properly with international calling credit on the account, because I didn’t buy any.
  • Calls to a carrier access code plus any number route to a recording that says “You have reached a YMAX Communications test number. This call was successful.”
  • Dialing 0 provides instructions to dial the area code and telephone number. 0+ calls yield the same results.
  • While most calls appear to be routed either through local access tandems or dedicated interconnection trunks, YMAX doesn’t have interconnection agreements with every ILEC, CLEC or wireless carrier. For these calls, AT&T appears to be the long distance carrier (based on all circuits busy recordings). The trunk used is 062T, which is the New York 24 tandem.
  • Call waiting works correctly. There is no 3 way calling available on outbound calls. A 3 way calling feature for inbound calls is available, but I couldn’t get it to work.
  • Voicemail is available, and is surprisingly rich and full featured. The terms of YMAX’s interconnection agreements require a reasonable degree of traffic parity for the “bill and keep” arrangements made, so YMAX definitely wants you to receive calls.
  • Call forwarding is available via the MagicJack website. You can log in to set up forwarding.
  • *67 doesn’t work, and there’s no apparent way to block caller ID (either per-call or permanently).

The Ace in MagicJack’s Sleeve

Unless MagicJack is a giant Ponzi scheme, how could they possibly afford to provide unlimited calling for only $20 per year? This is something I really wanted to find out, given the spectacular collapse of previous VoIP services priced well below market.

What I discovered is that $20 per year may become the new market price for voice service. MagicJack is a subsidiary of YMAX Communications Inc., a fully qualified CLEC with a management team consisting of numerous telecommunications industry veterans. These folks knew what they were doing, and played their cards very shrewdly when setting up the company. In reviewing the interconnection agreements filed between YMAX and AT&T for its 13-state region (handled by tminc.com), the billing arrangement is consistently “bill and keep” and is not subject to access charges (a topic I’ve written extensively about in previous columns). There is one exception, which is ISP-bound traffic. This is subject to a .0007 cent charge per minute of use, where activity exceeds a 3:1 terminating to originating ratio. This is clearly why MagicJack provides such full-featured voicemail; they need to maintain at least this balance of inbound to outbound calls in order for their business model to work. In fact, it is possible (though unlikely) under this arrangement for YMAX is to receive reciprocal compensation from AT&T for inbound calls to MagicJack lines while terminating calls for free to AT&T’s network. In many states, it’s difficult to obtain access to tariffs without paying. However, I was able to review a Qwest tariff for Montana and a Verizon tariff for Illinois containing similar terms, so it’s reasonable to believe that YMAX has pursued a consistent strategy with respect to interconnection.

While the underlying carrier (YMAX) is a CLEC, MagicJack is specifically not offered as a CLEC product. The terms of service explicitly state that MagicJack is “…a multimedia experience which includes a voice over Internet information service feature. It is not a telecommunications service and is subject to different regulatory treatment from telecommunications services.” This appears to exempt MagicJack from essentially any regulation from either the FCC or local public utility commissions.

And with that, Skram will hate me. I’ve used more space than I’m usually allowed, which will make his job of laying out the magazine more difficult. It’s time to bring this column to a close. Have a safe winter… and if you make it to China, enjoy the Harbin ice sculptures, try some delicious Uighur cuisine, and don’t miss the pandas!

References

http://www.magicjackhacks.com/ – Site with lots of interesting information using MagicJack in undocumented ways.

http://www.magicjack.com – Official MagicJack site.

http://www.sjlabs.com/ – SJ Labs site. You can download their legacy softphone product here.

http://www.ymaxcorp.com – Corporate site for YMAX Communications, parent company of MagicJack and SJ Labs.

http://tjnet.com/ – TigerJet, manufacturer of the chipset used in MagicJack hardware.

Shout outs to: Chronomex, afiler, javantea, maokh, inf0reaper, Dan Kaminsky, and the Metrix Create:Space crew.

 
by root on Regulatory Issues

The Curious World Of Telecommunications Tariffs (Spring, 2009)

Hello, and welcome to the Central Office! I don’t have a cold but I’m sneezing, which signals spring—my least favorite time of the year here in the Great Northwest. It’s barely discernible from winter, except that everything starts blooming, the roots start attacking my sewer line, and a handkerchief becomes a nearly permanent fixture on my nose.

So, in keeping with my least favorite springtime things, I could write a long rant about the pack of thieving raccoons that lives behind the fence and knocks over my garbage cans. Or about the gopher who pushes up little dirt mountains all over my lawn. I could write a rant about the teenage heavy breathing I barely ever hear anymore during my “service monitoring” because the kids are skipping the talk and just sending compromising picture messages to just the two of them and the whole Internet. Instead, though, I’ll take you through the dank, dripping hallways of any regulated utility’s nemesis: the state public utility commission.

Washington Utilities and Transportation Commission logo

Nearly every aspect of telephone service was once regulated, ranging from directory assistance to the placement of telephone poles to the format of your bill. Actually, all of those things are still regulated, but many other services (such as long distance, Internet, and voicemail) are effectively not. In fact, cell phones, long distance, Internet service, VoIP and most other ways of communicating are all but unregulated. However, traditional telephone service remains a regulated utility, like electric or gas utilities. Services from your telephone company are largely regulated by tariffs, both at the federal and state level. Republicans generally oppose federal regulations, and as they have exerted political control over the past 8 years, there has been a deliberate and substantial dismantling of nearly a century’s worth of federal regulations on telephone service (apart from surveillance requirements, which have increased substantially). In effect, most federal agencies have only token, toothless enforcement mechanisms and commissioners are lap dogs of the industry.

Ostensibly the FCC regulates long distance telephone service, but tariffs are no longer reviewed or approved and are self-reported by the carriers on their own Web sites. There’s a really tough enforcement mechanism for any failures, though; long distance carriers are accountable to themselves to self-report any lapses. If your phone company has accepted certain government funds, it might also be regulated by the Department of Agriculture’s Rural Utilities Service (formerly known as the Rural Electrification Administration) which provides funding for network development in rural areas. As I’ve written previously, the FBI has been granted de-facto regulatory power over the telephone system’s surveillance capability, known as CALEA. The NSA has also (presumably) been granted secret powers to do secret things in secret facilities constructed at tandems across the US, but whether or not they have been granted this authority is in itself a secret.

Room 641A

Room 641A, widely believed to be a NSA facility at AT&T’s San Francisco tandem

Most states have not been as easily convinced as the federal government to give up regulatory authority within their jurisdictions, and unlike the federal government, they generally do not conduct their business in secret. Telephone service—at least the ever-dwindling parts of it under state jurisdiction—is strictly regulated by the PUC’s regulatory tariffs. Here in my Central Office, services are divided and catalogued as regulated and deregulated. Trouble tickets on deregulated services almost never result in overtime, and I can work them more or less at my leisure (strictly within union work rules of course). Telephone companies love deregulated services. They can charge whatever rates they like, change the rates as often as they like, offer whatever promotions and marketing bundles they like, and they’re not accountable to the PUC for delivering any particular level of service quality. After all, if you aren’t satisfied with the service, your only meaningful recourse is generally not to subscribe.

Regulated services are an entirely different matter. Everything from the number of blocked circuits to outside plant demarcation points to billing practices—and most importantly rates—are regulated by the state Public Utilities Commission. The telephone company publishes a service catalog for both regulated and unregulated services, and for regulated services, publishes tariffs. It is accountable for delivering services exactly as advertised in the service catalog, and precisely according to the rates and conditions outlined in the tariff. Deviations are not permitted in any way. Only the services described in the tariff can be offered, at the prices they are advertised, or heavy fines can result.

For the curious phreak, browsing tariffs can result in some fairly interesting discoveries. For example, despite party lines having been obsolete for decades, there still exist tariffs for them in many states that grandfather existing users. I recently disconnected the final remaining party line in my wire center, which belonged to a subscriber who was 92 years old and had maintained the same service since 1946. In effect, she didn’t really have a two-party line anymore; the other party on her line moved away in the early 1980s after party line service was discontinued for new subscribers. However, her rate was grandfathered in under the old tariff, which was last revised in 1971. Other tariffs provide geographical exceptions. When a new Central Office is constructed (an incredibly rare event these days, but not uncommon in the rapidly growing Western US as little as 25 years ago), the serving boundaries are strictly defined by tariff. Accordingly, people living in the area with existing telephone service have to be explicitly allowed to maintain service from their existing wire center. Qwest, in fact, has an entire section of their tariff library in each state dedicated to obsolete tariffs detailing the rates and terms of services that are no longer offered, but are still maintained for existing subscribers.

On a more practical level, browsing tariffs is a good way to learn exactly how much you can squeeze out of your phone company in promotions or retention offers. In general, all of these offers have to be filed with the Public Utility Commission. For example, in Washington, Qwest can offer you a promotional credit in a value equal to three months of the service to which you’re subscribed. They can only do this once every two years, either to win a new subscription or to stave off a cancellation. And that’s all they can offer, but they don’t have to offer you the maximum (and usually won’t as a starting point for negotiations).  Of course, if you read the tariff, you’d settle for nothing less than the maximum.

Finally, understanding which services are in the catalog, their brand name, and the applicable Universal Service Order Code (USOC) can help you save money (sometimes a lot of money) on features. For instance, there is more than one way to skin a cat, and there’s more than one way to have a phone number in a different wire center ring your line in my Central Office.  Most people needing this capability order a foreign exchange circuit, which bills a hefty setup fee and an even heftier monthly fee (including a mileage charge). The bill can easily run to over $100 per month or more. Alternatively, you could order a cheap, obscure and rarely used service called “Market Expansion Line” for business lines, or an even cheaper and more obscure service called “Number Forwarding” that is the exact same thing minus a Yellow Pages listing. These services set up a “ghost number” in the remote office, with permanent call forwarding to your regular number. The business office will sell these services to you, but only if you ask for them specifically; otherwise they’ll sell you a foreign exchange circuit. The only thing you give up is a dialtone from the distant Central Office, which can help you avoid intraLATA toll charges in limited circumstances. These days, long distance is—in almost any usage pattern—less expensive than a foreign exchange circuit. Nonetheless, even though foreign exchange circuits almost never make financial sense, busy Central Offices still do a brisk business in them. One local plumbing company has over a half-dozen foreign exchange circuits, all of which are—in my estimation—completely unnecessary. Unfortunately, I can’t advise them that they’re wasting money because the tariff strictly regulates subscriber privacy, and I’m not allowed to use subscriber information to suggest products or services without the subscriber’s explicit consent. And considering the subscriber has to contact me before I can request that consent, I’ll probably retire before I can save these folks a dime.

And with that, it’s time to bring this issue of the Telecom Informer to a close. Drive carefully while sneezing from all the pollen. And remember that if you wrap your car around a telephone pole despite it all, you can blame the Public Utilities Commission for its placement!

References 

http://tariffs.qwest.com:8000/Q_Tariffs/index.htm – Qwest tariff library

http://serviceguide.att.com/servicelibrary/consumer/ext/index.cfm – AT&T tariff library

http://www22.verizon.com/tariffs/ – Verizon tariff library

http://tariffs.net/hawaiiantel/ – Hawaiian Telecom tariff library

http://www.tariffnet.com/ – Pay site that tracks tariffs across substantially all telecommunications providers

http://www.puc.state.or.us/ – Oregon PUC

http://www.utc.wa.gov/ – Washington Utilities and Transportation Commission