(Reuters) - An appeals court struck down a rule on Tuesday that had been issued by the U.S. telecommunications regulator to allow customers to watch cable and satellite TV on "plug and play" televisions, replacing set top boxes.

Satellite TV company Dish Network Corp (DISH.O) objected to the rule because it included prescriptions on encrypting programming that prevented Dish and others from, for example, making deals with studios to play new movies on a pay-per-view basis.

At the request of Dish, the U.S. Court of Appeals for the District of Columbia Circuit struck down the rule issued by the Federal Communications Commission in 2003 that had been drafted by the cable companies.

The FCC rule - called the "plug and play" order - set standards that allowed customers to buy televisions that could plug into cable and satellite networks without using a set top box.

In its objection, Dish argued that the FCC lacked authority to impose the standards on satellite providers. The court agreed.

The FCC said it was reviewing the ruling.

The case is EchoStar Satellite LLC v. Federal Communications Commission, U.S. Court of Appeals for the D.C. Circuit, No. 04-1033.

(Reporting By Diane Bartz; Editing by Tim Dobbyn)