US regulators rule that China's Huawei and ZTE threaten national security

New York(CNN Business) American regulators voted to impose new restrictions on subsidies for American telecom companies Friday. The ruling is designed to constrain Chinese companies, including Huawei and ZTE.

The FCC's decision will prohibit American carriers from using federal subsidies to buy products from any businesses found on a new FCC blacklist. Huawei and ZTE could soon be the first companies on the list after the FCC initially designated both as a threat to national security. The decision could be finalized in a matter of weeks after the vote is officially published in the Federal Register.

The new rules mark Washington's latest escalation against Huawei, whom US policymakers accuse of threatening national security. Huawei denies the claims. But the Trump administration has argued that installing the company's equipment in US networks could allow Chinese spies to eavesdrop on sensitive US communications.

A handful of mostly smaller, rural wireless carriers currently use Huawei and ZTE (ZTCOF) equipment in their 4G LTE networks. But a bigger fight is taking place over Huawei's potential role in next-generation 5G networks, which are expected to power a host of new technologies including remote medicine, self-driving cars and more. The company's radio antennas and routers are already deeply embedded in the fledgling 5G networks of America's allies.

In opposing the new rules, Huawei told the FCC its plan was unconstitutional and violated the company's due process rights — foreshadowing a possible lawsuit against the agency. The company has deployed similar arguments in other litigation against the US government.