Sprint and Windstream have filed a lawsuit in protest against a Federal Communications Commission deregulation plan.

Last month the FCC approved a Report and Order that extends the scope of “regulatory forbearance” for companies offering business data services (BDS). This means a loosening of regulations for special access – connections used by wireless providers to move data through wired networks – in geographical markets that the FCC dubs competitive.

FCC Chairman Ajit Pai wrote that the agency will test the markets to determine if “50 percent of the locations with BDS demand in that county are within a half-mile of a location served by a competitive provider or if 75 percent of the census blocks in that county have a cable provider present.” If so, the area will be called competitive.

“In counties where the test finds sufficient facilities-based competition to discipline prices, we allow for pricing flexibility and begin the process of de-tariffing special access service,” Pai wrote.

He said the FCC will prevent the upward movement of prices for business data services in noncompetitive areas.

Windstream and Sprint this week filed a lawsuit that called the Report and Order “arbitrary, capricious, and an abuse of discretion,” requesting that the U.S. Court of Appeals in Washington, D.C., reverse the initiative.{ad}

The Kansas City Business Journal reports that the deregulation would remove price caps on the bandwidth that Sprint buys from carriers to patch holes in its network. The biggest cable companies are split on the FCC’s initiative, as AT&T fiercely opposed the policies of former chairman Tom Wheeler and welcomed Pai’s move toward deregulation.

FCC Commissioner Mignon Clyburn dissented from the 186-page Report and Order, saying that it will have a negative impact on local economies.

“Call it whatever you want – business data services (BDS) or “special access” – what this order does is open the door to immediate price hikes for small business broadband service in rural areas and hundreds of communities across the country,” she wrote. “Cash-strapped hospitals, schools, libraries and police departments will pay even more for vital connectivity, and soon we will see pressure on our rural health care and E-Rate fund budgets, resulting in less bandwidth for our schools, libraries and rural health-care institutions.”

She argues that while more cable companies have entered the business data services market, there has been “significant consolidation” among those companies, such as Verizon and XO, Windstream and EarthLink, and CenturyLink and Level 3.

“Yet, the order uses as its justification to deregulate the existence of competitors that no longer compete in the market, and the fact those former competitors have been purchased by the very incumbents they are supposedly competing against, magically gets lost in the analysis,” she said. “Mark my words, we will see more, not less, consolidation as a result of this order.”

Last year Sprint and Windstream joined with Frontier Communications in support of expanded price caps for business data services.