The Federal Communications Commission on Tuesday officially designated Chinese telecom-equipment companies Huawei Technologies Inc. and ZTE Corp. /zigman2/quotes/205359573/delayed HK:763 +0.31% as national security threats, in a move to protect U.S. communication networks -- in particular, emerging 5G networks. "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," FCC Chairman Ajit Pai said in a statement . The designation means that money from the FCC's $8.3-billion-a-year Universal Service Fund may not be spent on Huawei or ZTE equipment or services. The decision mainly effects smaller, rural U.S. telecom companies. The FCC initially barred spending on Huawei and ZTE products in November.