The U.S. Court of Appeals for the District of Columbia yesterday struck down a long-standing Federal Communications Commission rule that cable television systems must carry every local station broadcast in their area.

The decision by a three-judge panel said the FCC's "must-carry" rule violates guarantees of free speech in the First Amendment to the Constitution -- without sufficient justification that it is needed to protect diversity in local broadcasting.

The National Cable Television Association, which represents cable television operators, released a statement hailing the decision as a "tremendous victory" for the "consumer interest." The group said cable systems now would be able to transmit more programs that "subscribers want" instead of being forced to carry "duplicate network affiliates and other local stations in which they have little or no interest."

However, the National Association of Broadcasters, composed of about 680 television stations and the three major networks, assailed the ruling as "a blow to the localized system of broadcasting in this nation," and said it "changes the entire nature" of cable television by allowing cable systems to "pick and choose what local signals the public can see."

NAB President Edward O. Fritts said his association "intends to pursue all legal options in this case." But a spokesman said the NAB had not yet decided whether to ask that the decision be reconsidered by the full 10-member court of appeals or to appeal directly to the U.S. Supreme Court.

The spokesman said the NAB may ask for new congressional legislation. Fritts suggested that if the ruling stands, Congress should remove the current exemptions that cable systems have from copyright laws, which would require them to pay market prices for programs they rebroadcast.

In a 59-page opinion written by Judge J. Skelly Wright, the appeals court said the "must-carry" rules "profoundly affect values that lie near the heart of the First Amendment.

"They favor one group of speakers over another. They severely impinge on editorial discretion," Wright declared. "And, most importantly, if a system's channel capacity is substantially or completely occupied by mandatory signals, the rules prevent cable programmers from reaching their intended audience even if that result directly contravenes the preference of cable subscribers."

The court noted that the current FCC rule makes no distinction between financially strong stations and weak ones or between cable systems that can carry 100 signals and those that carry 12. Under a special exemption, the "must-carry" rule does not apply to Washington and Baltimore.

The opinion suggested that new rules making these distinctions might pass constitutional muster, but the court said it would not tell the FCC how to "recraft" the rules.

The cases decided yesterday were brought by Quincy Cable TV, a small system in the state of Washington, and by Turner Broadcasting, which operates Cable News Network and Atlanta "superstation" WTBS.

David M. Silverman, a lawyer for Quincy, called the decision "probably the most significant one ever about cable" because it sweeps away "probably the most burdensome rule that the FCC has." He said it could open a "free market for cable operators and TV stations to negotiate about carriage rights."

An FCC spokesman said the agency had not decided what legal steps to take next. However, one FCC source said the agency was "not terribly unhappy we lost this case. There are a lot of people here who would have dropped these rules a long time ago, but we couldn't because of pressures from the broadcasters. The rules have been an anachronism for some time."