Federal Communications Commission Chairman Mark S. Fowler yesterday defended his decision to lift the ceiling on the number of television stations that one owner may hold.

Fowler told a skeptical Senate Judiciary Committee that ownership limits frustrated competition and diversity of programming "by insulating the networks and broadcasters from more effective competition from group-owned stations."

The commission voted in July to revise the 31-year-old ownership rule by allowing broadcasters to own 12 television stations, 12 AM radio stations and 12 FM stations, instead of seven of each. In broadcasting jargon, the FCC replaced its "7-7-7" rule with a "12-12-12" rule. The commission said it plans to eliminate the ceilings by 1990.

Although there was no dispute about the new limits on radio station ownership, the television guidelines were criticized on Capitol Hill. The Senate approved an amendment to a supplemental appropriation bill to block the rules change because of the dominance of the three major TV networks -- ABC, NBC and CBS -- and fear of media concentration if they were allowed to own more stations directly.

After Fowler explained the FTC motives yesterday, Sen. Orrin G. Hatch (R-Utah) responded, "I do not believe the commission has established an overwhelming case for the 12-12-12 rule."

"Why not more than 12 stations?" asked Sen. Pete Wilson (R-Calif.), complaining that the number appeared to be arbitrary. "I think 12 is too many -- a 140 percent increase."

Rep. Timothy E. Wirth (D-Colo.), chairman of the House subcommittee on telecommunications, introduced legislation in August to modify the FCC rule to include a measurement of audience reached rather than number of television stations owned. A few weeks later, Wilson introduced a similar bill.

The FCC yielded to such congressional pressure and put off the effective date of the TV ownership changes until next April.

The hearings are being held to assess the antitrust implications of eliminating the ownership ceilings.

At yesterday's hearing, Fowler said the FCC had been unable to find any reason to limit networks to owning fewer stations than other broadcasting groups. "Competition is a process, and we don't want to skew it one way or the other. You've got to be able to show harm based on a record to treat the players differently," he said. "And if you hold the networks back, you don't in any way negate their dominance" thanks to their affiliates across the country, he added. "Historically, group owners have provided a greater amount of local news and other programming," he asserted.

Fowler stressed that the rule change would not affect other ownership rules and would prevent one party from owning more than one television station in any local market, or a network from acquiring a nonaffiliated station if that would significantly threaten competition in a local market. Such acquisitions would not meet with an easy time at the commission, he said.

Nevertheless, Fowler said he would "be open to and happy to consider" the concept of limiting station ownership on the basis of audience reached rather than number of stations owned.

Sen. Howard M. Metzenbaum (D-Ohio) told Fowler, "It seems to me your arguments can be used to support an increase for group owners but not network ownership," and suggested the proper goal should be spurring more competition for the networks.

Jack Valenti, president of the Motion Picture Association of America, said the networks must be treated differently under any plan to increase ownership limits. Although the acquisition of more local stations by a network might not improve their dominance on a national level, such acquisitions do pose a threat to media diversity at the local level by allowing them to control more news programming, Valenti claimed.

"MPAA's opposition is based entirely upon its private interest," countered ABC General Counsel Everett H. Erlick. He said the studios represented by Valenti are well aware that group and network-owned stations tend to produce more local news and entertainment programming rather than buying shows from Hollywood.