Last week, the Supreme Court refused to review a decision by the 3rd Circuit Court of Appeals that reversed broadcast ownership rules the FCC adopted in 2003. So the appeals court decision stands, and the FCC must revert to pre-existing rules that arbitrarily limit what a broadcast licensee may own.

Americans can freely own large numbers of patents, FAA airline authorizations, fishing licenses, mineral exploration rights, and other government grants of authority. If this ownership poses potential harm to the public, many government agencies stand ready to protect the American consumer. Restrictions on ownership are tied to clearly demonstrable harm to the public on a case-by-case basis.

But there is one notable exception to our government’s approach to the ownership of government-issued assets: broadcast licenses. Since the 1930s, the FCC has had complex, arbitrary limits on broadcast license ownership unrelated to any specific demonstration of harm.

Broadcast ownership rules were gradually relaxed over the past 20 years. Had Al Gore been elected president in 2000, most industry observers expected further gradual relaxation. With President Bush’s election, the rules were widely expected to all but disappear.

Gannett, Scripps Howard, Tribune Company, News Corporation, NBC, and many other companies planned – and some even made – investments in anticipation of relaxed rules. Those who wanted to keep them were resigned to defeat.

But on the road to deregulation, the FCC blinked. Rather than immediately adopt the anticipated rules changes in 2001, the FCC sought more and more information on media ownership. Rather than simply end arbitrary ownership rules, the FCC considered how to replace one set with another. Month after precious month passed.

As the FCC equivocated, opponents of deregulation led by Commissioner Michael Copps launched a counterattack based on a grassroots movement of Americans fearful of media consolidation. The pro-regulation forces spanned the political spectrum from community activists on the left to the NRA on the right. With each passing week, the prospects for continued regulation gained.

By the time the FCC finally voted on new regulations in the summer of 2003, the political discussion had shifted from removing outdated, arbitrary rules to the evils of media consolidation.

The FCC adopted Chairman Michael Powell’s proposed rules on a party-line vote. Within weeks, Congress overwhelmingly overrode part of the FCC’s new rules addressing national ownership caps on television stations.

The remaining changes were challenged in the 3rd U.S. Circuit Court of Appeals. That court held that the FCC had acted arbitrarily in adopting a “diversity index” and other puzzling rules. The Supreme Court refused to stay the decision of the circuit court, allowing even more irrational and arbitrary broadcast ownership rules from the 1970s to return.

Today, rational regulation of broadcast ownership seems further away than ever. The crushing defeat of even minor steps toward deregulation has emboldened the advocates of continued regulation and dispirited their opponents.

Measured by market capitalization, the largest media company in the world, Google, is blissfully unregulated and could, if it chose to do so, buy newspapers with impunity. Other companies without broadcast stations are equally unaffected by the reinstituted FCC rules.

A former FCC commissioner,Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. E-mail hfr@furchtgott-roth.com.