Sprint and Windstream sued the Federal Communications Commission this week over a decision that will help AT&T, Verizon, and CenturyLink charge higher prices for certain business Internet services.

The FCC last month voted to eliminate price caps for the so-called Business Data Services (BDS) that are offered by incumbent phone companies throughout the country. The FCC decision to which Sprint and Windstream object only eliminated price caps in "competitive" markets, but it uses a standard that deems many local markets competitive even when there's only one broadband provider.

Sprint and Windstream both purchase bandwidth from BDS providers to boost their own networks. The Sprint/Windstream complaint in the US Court of Appeals for the DC Circuit alleges that the FCC decision is "arbitrary, capricious, and an abuse of discretion." The complaint also asserts that the FCC decision violates federal laws including "the notice-and-comment requirements of the Administrative Procedure Act."

Just last year, the FCC "found that 'competition remains stubbornly absent' in many parts of the business data services marketplace." The commission proposed stricter rules to ensure that non-competitive market conditions don't harm business customers, the complaint notes. But the FCC took a different course when the majority shifted from Democrats to Republicans following the presidential election.

The Republican-led FCC's decision eliminates price caps in a county if 50 percent of potential customers "are within a half mile of a location served by a competitive provider." A county would also be considered competitive if 75 percent of Census blocks have a cable provider.

The FCC declined comment on the Sprint/Windstream lawsuit when contacted by Ars today.

The BDS services affected by the recent FCC decision provide dedicated links over copper-based TDM networks with speeds of up to 45Mbps upstream and downstream. FCC Commissioner Mignon Clyburn, a Democrat, warned that the change will force hospitals, schools, libraries, and police departments to pay more for Internet service. This type of connection is also commonly used for bank ATM networks, retail credit-card readers, and enterprise business networks with branch offices, the FCC has said.

Because wireless carriers such as Sprint buy bandwidth through BDS offerings, the prices have an indirect effect on mobile broadband prices. However, the FCC does not impose any price caps on consumer broadband services.