In a brief interview in AdWeek yesterday, Mark Cuban said "if Apple released a set-top box that supported authentication for multichannel video programming distributors (like cable and satellite companies), it would be a huge success." I agree with him - and that's exactly why such a product won't see the light of day.
As I asserted in August ("Apple to Make Cable Set-Top Boxes? Not. Going. To. Happen."), if pay-TV operators invited Apple to make set-tops it would be like letting the proverbial fox into the henhouse. They would be turning over their user experience to Apple, allowing the company to drive the UI and therefore reshape the video experience as it determined, just as it has done in music with iTunes. While there might be some short-term benefits (e.g. lower capex, etc.), the pay-TV industry's ability to sustain its multi-channel bundle long-term would be undermined.