The Federal Communications Commission voted Friday to ban cellular carriers from using federal subsidies to buy equipment from Huawei and ZTE, two Chinese companies, saying the companies endangered national security.
The rules put new restrictions on money earmarked for expanding broadband to underserved areas of the country, including rural areas, where it can be prohibitively expensive to build internet infrastructure without government support.
The agency's five commissioners unanimously approved the proposal. They said the move was vital as U.S. wireless carriers roll out the next generation of wireless technology, known as 5G. The new restrictions could eventually cover additional companies.
"In taking these steps, we demonstrate the FCC's commitment to doing everything we can to address national security threats to our communications networks," said Ajit Pai, the FCC's chairman.
Huawei has denied that it would enable Chinese government spying and criticized the FCC's decision.
"These unwarranted actions will have profound negative effects on connectivity for Americans in rural and underserved areas across the United States," Huawei said in a statement. The company added that it believed the FCC order was "unlawful" and based on a faulty understanding of Chinese law.
The FCC vote was the latest action in Washington to limit Huawei's ability to operate in the United States. The Commerce Department has placed Huawei on a list of companies that U.S. firms cannot sell to, and policymakers have tried to stop federal agencies from buying its products.
The restrictions have pleased Huawei's critics. But it worries rural telecommunications providers, who said the Chinese equipment is more affordable than similar products from competitors.
The debate at the FCC now moves to a new front: the Huawei and ZTE equipment already installed around the country. Rural providers have pushed for money to reimburse them should they be required to replace the equipment.
The arguments over Huawei have been heightened by President Donald Trump's apparent willingness to use the firm as a bargaining chip in his ongoing trade war with China, concerning critics who said trade talks should not be tied to national security questions.
On Monday, the Commerce Department said it would extend a temporary license that allows U.S. companies to continue working with Huawei, despite the export restrictions linked to its presence on the so-called "entity list."
Wilbur Ross, the commerce secretary, said later in the week that it had begun to issue licenses to specific U.S. firms to allow them to circumvent the restrictions as well. On Thursday, a group of senators from both parties called on Trump to stop issuing those licenses.
The group, which includes Sen. Chuck Schumer, D-N.Y., the Democratic leader, said the licenses would "allow Huawei to fully resume its engagement with certain U.S. firms without an adequate assessment of the risks to national security."