My problem is also very similar. When I call people on my magic jack they say I am cutting out. But they sound great to me. So I had my roommate call my cell with the magic jack and I heard him cut out. I have a brand new cordless phone. I have tried, different phones plugged into the magic jack and phone cords, I've tried a none cordless phone and I even tried calling different cell providers to make sure it was my cell providers fault. Every configuration has given me the exact same result. When I use the magic jack the person I call sounds great but my voice is broken up to them. I have cable broadband internet with 5mb download speeds. I can play games like WoW flawlessly so I know my computer is up to snuff.
Try your magicjack device in another usb port, as they sometimes share an irq internally with other devices, hence the chopped sound. Also make sure your computer is no trying to go into sleep or suspended mode, check the power settings to make sure the system is not shutting down devices in low power or battery mode if using a laptop, make sure the connection speed is good and strong, especially if connected to a laptop, and make sure nothing is hogging the cpu, causing the chopped sound. Also there could be issues with the router. Lastly, perform a firmware upgrade on your magicjack device, restart the machine, and then test it again. Good luck.
SOURCE: calls cutting out with magic jack
Your ISP connection speed may be inadequate. Typically, the upload speed (outgoing voice) is much slower than the incoming speed. To check majicjack recommends that you test your system on http://www.speakeasy.net/speedtest/ .
It's also possible that your internet provider is purposely delaying the outgoing latency in order to discourage VoIP that THEY don't provide. I think this is (or at least should be illegal) but in any case a complaint to the FCC might be in order.
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