What Europe can learn from America's "rip & replace" slog

This article is authored by John A. Howes, Jr., who is Principal of Magis LGA, LLC, a premier legal and government affairs firm. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of  EU Tech Loop

With the EU weighing mandatory bans on high-risk vendors like Huawei and ZTE across its telecom and digital networks, Europe can learn much from the US, which has been going through its own process for seven years.

If Europe wants to compete with the US and China on AI, stanch market share losses to China’s state-sponsored champions, and improve broadband connectivity, it needs to ensure that it gets its “Rip & Replace" policy right, and right now.

In 2019, the U.S. Congress tasked the US telecom regulator, the FCC, with setting up the program, colloquially known as "Rip & Replace".  Network operators were reimbursed for the costs of removing, replacing, and disposing of equipment made by Huawei and ZTE.  Recipients had to complete that work within one year, but the program has been going on much longer than originally planned.

The first lesson: it’s all about the money.

After the FCC opened applications in 2021, demand hit nearly $5 billion, surpassing the $1.9 billion that Congress provided originally.  The FCC only had 39.5% of what it needed, so it initially allocated only 39.5% of the funds that any provider requested.

Between the bill's enactment and when the FCC set up the program, though, COVID hit.  Pandemic-related lockdowns, inflation, supply chain shocks, logistics bottlenecks, and skyrocketing costs just made things worse for Rip & Replace projects.

In late 2024, Congress finally gave the FCC the $3.08 billion it needed to complete the Rip & Replace work.  I was on a team that led that effort, advocating for the smaller telcos mostly serving rural communities.  Many would have gone bankrupt without the additional funding.  

Funding is also an issue for Europe. The European Commission estimates that it will cost €10-13 billion total over three years.  However, GSMA says it would cost between €30-40 billion.  I’m not an economist, but considering that inflation is higher now worldwide than it was in 2020, if there are any more supply chain shocks, equipment costs go up, and/or labor scarcity increases, and, you know, “time value of money”, any cost estimates today will probably increase in the future.

The second Lesson: it’s about time

Seven years on, Rip & Replace is finally wrapping up.  But, that’s a misnomer.  You can’t just rip out the untrusted equipment.  If you did, your network would go dark.  First, you have to install new, trusted equipment; then migrate network traffic through the new gear; and then power down and remove the untrusted gear.  You also have to do a lot of testing; simulations for network coverage with new equipment; configure new radios, antennas, and core elements; etc.  

Timing is critical because, as we saw with COVID, you can encounter vendor supply constraints.  And then there’s getting permits for the new equipment and installations, finding construction crews, dealing with shortages of skilled technicians.  And then, there are limited construction windows due to difficult geographies in mountainous areas and short building seasons.  For example, a company I worked with could only access one of their towers for about 6-8 weeks each year because of cold and extreme winds!  

Regulators need to be realistic, but also provide flexibility, considering the numerous factors that can (and will) delay work.  For example, the FCC’s staff have been understanding of network operators' circumstances, especially during COVID, granting extensions, including more this year, to give providers more flexibility.

Europe faces similar problems, but its fragmented policy makes it worse. Europe has major exposure, so it needs to get the policy right, right now.  Politico EU has a helpful map here, showing each country’s exposure, and in some places it’s pervasive.  

Europe’s situation is worse, though, because it never adopted a single EU-wide rip-and-replace law.  The EU's 5G Toolbox set out a framework and urged member states to restrict "high-risk vendors," but individual countries have moved at very different speeds.  Sweden barred Huawei and ZTE from 5G networks back in 2020. Germany, after years of internal debate, agreed with operators to phase out Chinese components from the network core, with a longer runway for the radio access network.  Others have moved more slowly or left the toolbox collecting dust.

How can Europe do this better?

Adopt a Unified Policy.  The US program has one funding pool and one regulator tracking progress.  Europe has potentially 27 different funding pools and programs.  The EU doesn't need to copy the FCC exactly, but it should have one funding backstop and a shared deadline, rather than a toolbox that different capitals can leave on the shelf.

Fund it Before you Mandate it, Not After.  Any European mechanism — whether centralized EU funding or coordinated national funds — should have money committed BEFORE operators are told to start ripping out equipment, so they don’t scramble later.  Otherwise, operators could stall, take on debt, or quietly delay compliance.  Also, committing public funds up front will help network operators attract outside financing to complete the work.

Tie Funding and Performance to Other Benefits. Lithuania prohibits “high-risk suppliers” (explicitly Huawei and ZTE) from 5G networks and required their removal from core networks by the end of 2023.  The ban was enforced via a national cybersecurity strategy that followed the EU 5G Toolbox.  No fines were initially imposed, but non-compliance risked license revocation.  By the end of 2022, Chinese 5G equipment was gone.  

The EU should consider policy carrots and sticks.  As a carrot, fast-track permitting for Rip & Replace work.  As sticks, though, revoke licenses or prevent network operators from accessing additional funding sources if they keep untrusted equipment on their networks after specific deadlines. 

The American experience with Rip & Replace suggests that time is of the essence, though carriers need flexibility to get the job done, but funding is critical if Europe wants secure networks.