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Why BT spent $105 million on Ribbit

JP Rangaswami, managing director of service design at BT, explains the logic behind acquiring the Silicon Valley-based Internet telephony company.

JP Rangaswami David Sifry

JP Rangaswami, managing director of service design at BT (British Telecommunications plc), has a vision for the future of the telephony industry.

"The telcos have lost control of the device. When you start building genuinely agnostic services, when you don't know the target device, it requires a different form creativity," he said. It's a move from closed networks to more open software platforms, and part of BT's transformation from a telco to a platform-based, software-driven services company. "Everything we do at BT is embeddable as workflow for customers. Voice is a feature embedded in the workflow," he added.

Rangaswami's vision explains why his company plunked down $105 million to acquire Ribbit this week. (see Techmeme). Ribbit's software allows developers to integrate voice features to Web applications, such as, Facebook, and the iPhone. In the coming weeks, BT will integrate Ribbit with its 21CN network, which is available in more than 120 countries.

Ribbit Applications

Ribbit built a set of voice APIs that only make sense as part of a global network services company like BT. "The market moved from voice as a silo to voice as applications, and is still stuck there. Voice as a feature is our starting point," Rangaswami said.

He is depending on what he called the "magic of the community" to "see things we cannot" and innovate with BT's development platform and network. "We have become background catalysts, building better tools for the channel and developers," he added.

"The value only comes if you have applications that are used in an all-IP environment, and you can deploy services at the touch of a button rather than fiddling around with jumpers and cables. Ribbit is Silicon Valley's first phone company where you fiddle with software, not cables," Rangaswami said. "The story is not about cost reduction per se or telling customers what they must do to change or a backplane move. It's about innovation. The primitives of the network are exposed."

The fact that Ribbit is located in the midst of Silicon Valley, and a hotbed of developers, was also a factor in BT's decision to buy the company.

GigaOm's Om Malik likes the vision, but is skeptical about BT's ability to execute.

The 21CN plan included a platform that allowed developers to embed voice into Internet applications. That platform still exists, but one wonders if anyone is using it. So perhaps they had to go out and buy what is essentially a Class Five switch with a pretty Internet interface.

Ribbit, as an independent company was able to get some--not a lot--of developer interest. I am not sure how BT is going to do that. It is after a telecom operator, who wants to operate like an Internet company. Sure, in a circus you can make a dog walk on two legs as well.

As Malik implies, Rangaswami's next challenge will be getting the developer community to adopt his voice-as-a-feature-at-the-edge-of-the-network approach. It won't be difficult to convince people that voice features, like social networking, should be available to any Web site or application. Competing against Google's forthcoming Android, the iPhone, and other developer platforms will be trickier. As Rangaswami said in a video about the deal, "Execution is the name of the game now."