The U.S. Federal Communications Commission voted unanimously Friday to designate Chinese companies Huawei and ZTE as national security risks.

This designation bars companies in the United States from accessing a $8.5 billion government fund -- known as the Universal Service Fund -- from buying equipment from these Chinese telecom giants.

The fund was created in 1997 to aid mainly small businesses in providing universal access to telecommunications services, particularly those who live in low income, rural, or high-cost areas.

Additional companies could also fall under the rule, the FCC said.

The U.S. telecommunications regulator will also consider whether they should ask companies that use the fund and have already made Huawei and ZTE purchases to "remove and replace equipment and services".

The FCC is now seeking public comment on how the government will pay for costs associated with removing and replacing equipment which could cost up to $2 billion. A final order compelling removal of equipment is not expected until next year at the earliest.

HUAWEI RESPONSE

Huawei has called the ruling "unlawful" saying it singles them out as a national security threat but they gave "no evidence that Huawei poses a security threat."

Huawei said the FCC has mistakenly assumed that Huawei could come under Chinese government control. It said that the decision was based "on nothing more than irrational speculation and innuendo.”

The FCC argued the companies’ ties to the Chinese government and military apparatus, and Chinese laws requiring that such companies assist the Chinese government with intelligence activities, pose a U.S. national security risk.

Huawei and ZTE now have 30 days to contest the designation.

The U.S. government has instituted a series of actions aimed at barring American companies from purchasing Huawei and ZTE equipment.  In May, Trump signed an executive order declaring a national emergency and barring U.S. companies from using telecommunications equipment made by companies posing a national security risk. The Trump administration also added Huawei to its trade blacklist in May, citing national security concerns.

The FCC's ruling comes just days after Huawei received a 90-day extension for its Temporary General Licenses, which allow carriers to continue service to customers in remote parts of the U.S.

With information from Reuters and AP.