The FCC announced in April that it would not provide subsidies from the Universal Service Fund to small carriers or those who operate in rural areas to buy equipment from Huawei or fellow Chinese firm ZTE Corporation.
Small amounts paid by telephone subscribers along with their monthly bills go to make up the Fund.
The FCC said the decision was taken because of the alleged national security risk posed by the two companies.
"Because Huawei is often not allowed to bid in US procurements, average prices for network equipment are higher here than in most other countries; and US customers generally pay higher prices for a lower level of mobile service than consumers elsewhere," the company said.
"Allowing Huawei to compete freely could yield savings of at least US$20 billion in building US mobile infrastructure between 2017 and 2020, which would likely be passed through to consumers.
"Conversely, restrictions on Huawei will result in excessive profits for a handful of other equipment suppliers in this highly concentrated market, which will give those companies an incentive to transfer their US profits to improve their positions in other countries where they face more vigorous competition.
"This will lead to a vicious cycle in which investment and innovation is driven into non-US markets and consumers in this country will fall farther and farther behind the rest of the world."
The Rural Wireless Association, a body that represents rural wireless ISPs that offer home or mobile Internet service and have fewer than 100,000 subscribers, has already lodged an objection to the FCC decision.
Huawei's filing said: “These high costs, which would particularly harm Americans in remote and low-income areas, cannot be justified by the supposed national security benefits of the proposed rule, because these are speculative.”
It said that if its equipment was not on sale to small carriers which were already using it, then they would face "disproportionate costs" in the hundreds of millions of dollars.
"There are serious problems with a 'mix-and-match' network approach, so many of these carriers would have to retire existing equipment long before the end of its useful life, at huge expense. Some rural carriers indicate they would likely forfeit USF support, and be forced to scale back their network coverage, rather than rip out and replace their core network."
The US began its efforts to force Huawei out of local contracts after a 2012 Congressional report alleged the company was a threat to national security, with a warning that Beijing could use its equipment for state-sponsored spying or cyber attacks.
Huawei has denied that it has ever been involved in conducting espionage on behalf of Beijing.