BT acquires Ribbit - the rise of Telco 2.0?

Says the Financial Times (pointing to BT's own Press Release):

BT today announced it has acquired Ribbit Corporation, a Silicon Valley-based 'Telco 2.0' platform company, for $105 million in cash, on a cash-free, debt-free basis. The acquisition will accelerate BT's strategy to transform itself into a next- generation, platform-based, software-driven services company.

Looks like Confused of Calcutta wasn't that confused on this one....

JP Rangaswami, managing director of service design at BT, said: 'Silicon Valley is emerging as a hotbed of telecommunications innovation. With Ribbit, not only do we extend our presence in the Valley, but we also gain a groundbreaking platform, a growing community of developers and a world-class team that share a common vision. Buying Ribbit lets us accelerate that vision.'

This makes sense in a number of ways for BT - as well as adding to the "what services can we offer on a 21st century network" portfolio, getting another finger into the US pie never hurts.

I'm sure the guys at STL Partners (who we work with quite a bit) will be heartened by the description of it as a "Telco 2.0" play given their hard work in promoting the concept

I have more thoughts on this but limited time right now - so this is a marker (to GigaOm) for when I can get back to it.

OK, time for more thoughts over afternoon tea. Firstly, though, a disclosure - we have been working with a number of Telcos to look at the services that are possible on top of 21st century-like networks, and have worked with the Telco 2.0 guys over the years on a number of areas. So we both know of what we speak, but may be funnelled by our previous experience.

The strategic thing is this - once you have a huge pipe that runs packets very fast and very reliably, a whole lot of things in the layers above above it fall into the "You wouldn't build it this way if you started from here" department.

This starts with datacentre architecture layer - the network truly can be the computer, and the storage facility, and the firewall, and a whole host of Web Hosting things which now literally can be hosted on the web. Call it the Grid, the Cloud, the whatever - it becomes the sort of thing a Telco can easily run as a utility, especially if you are trying to manage multi-media (fixed, mobile, voice, data etc).

Next up is the transaction/messaging layer - right now this is split between the telco, the application, and your computer. But in theory you can break up applications and put them all over the Web. You can break up the functions in your computer and do likewie (run apps from here, store data there etc)

This clearly radically changes the way you would design software, web services, and end user devices. And how you would run directories, social graphs, blog commenting systems and other "common" systems that today live in walled gardens ad infinitum.

This then has an impact on how you can operate the trust/identity/presence/security subsystems required - and when push comes to shove. most (ie non early adopter) users still trust Telcos a lot more than startups and for-profit ITC corporates to run these better and with more integrity (according to all the market research we have seen, anyway)

The issue of course is this is early days, and despite the hyperbole in some quarters you have to build this step by step as nothing works less well than early failure - as the continued waxing and waning of the "network PC" play has shown over 20 years.

A reasonable first step is to combine Voice functions with web services. A good way to do that is to buy something that looks like its succeeding, and its at a reasonable price (Ribbit may be a 2006 company but the guys have been building a Big Soft Switch for a long time) owing to the £/$ exchange rate (assuming that "cash free" here implies BT will actually pay for it* )

Will it work? Telcos are notoriously bad at initial execution (though they usually eventually get it right) but right now 60% on GigaOm's poll reckon its the best approach for BT

* Cash Free, Debt Free means BT grabs the remaining cash and assumes the debts and pays $105 m on top of that