The Motley Fool is normally pretty spot on in their analysis but when it comes to Apple's potential iTV offering they really miss the big picture. Here's why...
They talk about the ecosystem but they don't seem to understand what that entails. In a normal ecosystem you would have a conditional access system to encrypt/decryp the content, an EPG (electronic program guide) and a set top box. The set top box is really just a PC that has a single purpose (decoding TV channels) which could easily be replaced by an Apple device (either iTV or iPad) and the other components in the ecosystem could just as easily be replaced by iTunes (the Motley Fool article doesn't even mention iTunes!).
Apple first used iTunes to first conquer the music industry and then made equal inroads into the video content world. Why not live TV? Combine an iTunes cloud based delivery system with an iTV device in the home so people can watch ViaCom, AMC, Turner and any other content live as it is broadcast. The technology is there already. Apple could just add their own special wrinkles (which would make the product even more attractive).
Consider this example. Say I have iTV for my home and I have a subscription tier that includes the ABC/Disney suite of channels. I could watch ESPN on any of the TV's in my home and if I head out I could also watch ESPN on my iPad. I'm a paid subscriber and my iPad is connected to my iTunes account which verifies this. Better yet - instead of ESPN say I wanted to watch NESN (which is the regional sports network that carries the Boston Red Sox and Boston Bruins). If I paid a few bucks a month to subscribe for the channel why shouldn't I be able to pick up that channel no matter where I am in the country (the advantage of a cloud based delivery system). I'm guessing NESN would be happy with picking up all these new subscribers outside of New England. That could be one of the special wrinkles - more subscriber opportunities for niche channels that aren't carried by all operators.
The Motley Fool also misses the mark on the two real drawbacks to a potential iTV offering.
1. Local channels - how would these be addressed? A built in TV tuner and antenna? That would work and would probably eliminate any local retransmission fees but the picture quality would be iffy at best. If Apple were to come to agreements with ABC, CBS, NBC and Fox to stream live then most of the issues other than local news would be solved.
2. The whole premise is that this would be cloud based so Apple would not be in control of the last mile bandwidth which is bound to put them at some disadvantage. The Time Warners and Comcast's of the world can put together triple play packages which would give them pricing advantages over Apple. Then again - Apple users seem used to paying a premium. If the iTV service gave them what they wanted plus additional flexibility and choices - why wouldn't people sign up for it?
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