(Pocket-lint) - The Federal Communications Commission, a regulatory body in the US, has officially designated Huawei and ZTE as threats to national security, a final step in blocking the two Chinese telecommunications companies from billions of dollars in federal broadband subsidies.

What does this mean?

The FCC voted unanimously last year to bar telecommunications manufacturers it deemed national security threats from receiving funds meant to help expand internet access to rural America. The body's announcement on 30 June, declaring both Huawei and ZTE as threats, means American cellular businesses will no longer be able to spend federal money on equipment from the Chinese companies.

Specifically, the FCC has barred telecommunications providers from using government subsidy money - through an $8.3 billion Universal Service Fund - to purchase equipment from Huawei and ZTE for their own networks and subsequently any potential buildouts in underserved US regions.

Is there any evidence?

Although the FCC has yet to make public any evidence to prove Huawei and ZTE are US national security threats, the FCC's own chairman, Ajit Pai, has released the following statement about the matter:

“With today’s Orders, and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America’s communications networks -- and to our 5G future. . . Both companies have close ties to the Chinese Communist Party and China’s military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services.”

What do Huawei and ZTE say?

Both companies have repeatedly in the past denied any claims that they are threats to US national security. We've contacted them for a comment.

How does this affect you?

In reality, it doesn't.

Although it's an escalation in the federal government's bid to get Chinese telecom companies, like Huawei and ZTE, banned from the US, the only way it materially affects you is that it could make it harder for smaller companies to provide services to you at a more affordable rate. The FCC’s move, after all, blocks telecoms from using federal broadband subsidies on Huawei and ZTE equipment.

This issue is also separate from the US Commerce Department placement of Huawei on its Entity List. For more about the trade ban, go here.

Writing by Maggie Tillman.