AppleTV quality inferior

Question

When you down load a movie from Apple Store and play it back the quality is not even close to a standard definition DVD forget about comparing it to DTV HD channels or HDDVD or Blue ray. Even though the unit has beautiful high resolution graphics and ability to play stills from Iphoto, unless there is a way to import or sync to higher quality movie content the unit is not usable with high quailty TV's etc unless you like looking at soft, no contrast dim images.
G5 Quad, Power Book Pro 17"   Mac OS X (10.4.9)  

Answer 1

The quality of the video offered on iTunes needs
to catch up with the capabilities of the Apple TV.
The product is in ways ahead of its time. There are problems with offering high quality, high definition movies to mass markets by downloads, even with advanced H.264 compression: They are simply too large for the existing Internet infrastructure to deliver to large numbers of people at the same time.
Typical "backbone" lines that are the superhighways of the Internet have capacities of 45 MBps. There are dozens of these in the U.S. That is a lot of capacity, but just like with a highway system, not all of them connect every point & they can be overloaded if everyone uses them at once.
This is not a "last mile" problem -- even if someone builds a high speed highway to your door, to reach distant points quickly, you still have to merge with other traffic on progressively larger roads. In fact, as more people are able reach the larger roads quickly, the more likely traffic jams become.
This is also not a problem because of "dark fiber" that goes unused. Like a 10 lane highway that connects to the rest of the highway system only by a pair of narrow roads at its ends, this unused capacity is useless. The entire system must be free of bottlenecks & sized to handle peak loads to keep things flowing at maximum speed.
Of course, the tier one providers can add the capacity necessary to handle tens of thousands of simultaneous, multi-gigabyte movie downloads without affecting other traffic. The sticking point is who pays for it.