Analyst: Magicjack causing landline loss

Bernstein Research analyst Craig Moffatt has taken a closer look at MagicJack's reported customer win rate, and he thinks the company might be taking more landlines from telcos than most industry observers realize. MagicJack owner Dan Borislaw told an audience at CES that the company has moved more than 2 million units in the past 11 months ago and is now selling the device at a clip of 250,000 units a month. MagicJack launched in fall 2007, offering voice services for a flat $19.99 per year.

Moffat asserts that, if Borislaw's figures are accurate, then MagicJack sales could amount to up to 28 percent of landlines lost by telcos last year. Up until now, most substitution was assumed to be from landline to wireless devices, but the MagicJack figures show that VoIP calling devices are a factor as well.

Moffat also posited that many consumers may not have connected their MagicJack device after purchase, or kept their landline to use in addition to a MagicJack plan. "It's hard to imagine that more than a quarter of all access line losses are going to one company and a late-night direct marketer at that," Moffat told Telephony.

He also made it clear that telcos are more concerned about the losses themselves, rather than whether a wireless or VoIP device is to blame. But he said MagicJack's success can be attributed to excellent marketing, as it has avoided the pitfalls that befell many me-too VoIP players by making VoIP "a thing." By selling a tangible device that enabled VoIP calls, Moffatt thinks Borislaw and MagicJack were able to succeed, while other consumer VoIP players like Vonage got creamed by "digital voice" offerings from cable companies. 

For more:
- see the Telephony article here 

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