No person shall be permitted to locate, use, or maintain a radio broadcast studio or other place or apparatus from which or whereby sound waves are converted into electrical energy, or mechanical or physical reproduction of sound waves produced, and caused to be transmitted or delivered to a radio station in a foreign country for the purpose of being broadcast from any radio station there having a power output of sufficient intensity and/or being so located geographically that its emissions may be received consistently in the United States, without first obtaining a permit from the Commission upon proper application therefor.
How this was ever interpreted to allow Wolfman Jack to have record tapes in his Hollywood studios and shipped across the border to XERB, I will never know. Someone undoubtedly got a good lawyer and won the case in Court.
The British Post Office enacted similar regulations to stop Radio Luxembourg from operating London studios, at least on a live basis. Which makes it come as no surprise that the CRTC has followed suit.
Oddly enough, as the CRTC is finally getting serious about eradicating cross-border broadcasting, the FCC has, in recent years, routinely been granting permission for U.S. broadcasters to broadcast live on XERB and other border stations. The only wrinkle for those U.S. broadcasters is that the FCC includes the Mexican stations in the ownership limit calculations.
Why did the U.S. government enact such legislation in the 1930s? A big clue comes from the fact that the legislation is more commonly known as The Brinkley Act.
Dr. John R. Brinkley lost his medical and broadcast licenses, and two elections for Governor, in Kansas, before deciding to build a station in Mexico that could be heard back in Kansas where his medical clinic was still being operated by two of his proteges. As FCC rules tightened on what could be broadcast, by 1932, Brinkley's station was joined by 10 other Mexican border stations that broadcast programming that the FCC had banned. By 1933, the Mexican government had licensed Brinkley's station to broadcast with one million watts, though it is not clear that a transmitter that powerful was ever run reliably at full power. Not that it was impossible, as WLW Cincinnati began broadcasting with 500,000 watts at about this time under a 5 year experimental license from the FCC.
The Mexican government was more than happy to help as a way to bring the U.S. to the bargaining table, which finally resulted in the great frequency shuffle of 1941, when Mexico finally got some Clear Channels of its own.