The U.S. District Court of Appeals for the District of Columbia Circuit ruled against the FCC on Friday, potentially paving the way for large cable providers such as Comcast and Time Warner to buy up smaller competitors. The same court struck down a similar FCC rule back in 2001 and remanded the decision back to the agency.

The ownership cap didn't make sense in light of new cable competitors, including large telecom carriers, critics said.

"The court recognized that the 2007 analysis’ aging data and questionable assumptions sat oddly against the facts about new -- and successful -- competitors to cable systems in the multichannel video marketplace," FCC member Robert McDowell said in a statement. "It should go without saying that, in the future, outcomes in our proceedings should be driven by the facts and law, rather than the other way around.”

Comcast challenged the most recent cap, approved by the FCC in late 2007. “We are pleased the D.C. Circuit has vindicated our position," said Sena Fitzmaurice, Comcast's executive director for corporate communications and government affairs. "This important decision affirms that rules must reflect the changing realities of the dynamic video marketplace, where today consumers have more choice in video providers and channels than ever before.”

FCC Chairman Julius Genachowski, who wasn't with the commission during the 2007 vote, noted that the U.S. Congress in 1992 passed a law requiring ownership limits. "The FCC staff is currently reviewing the court’s decision with respect to the limit previously adopted, and the commission will take this decision fully into account in future action to implement the law," Genachowski said in a statement.