Just over one year ago, the second-generation Apple TV enabled my family to do something I had dreamed about for several years—canceling cable TV service. In a day, hours of mindless channel surfing disappeared, along with all the commercials, filler content, and scheduling unpredictability of broadcast television. Using Netflix as a primary resource and the iTunes Store as a backup, everything became on-demand; our three-year-old daughter actually expressed surprise one day when she saw her first live TV show interrupted by an advertisement. We saved money every month, enjoyed watching past seasons of shows we wouldn’t have sampled otherwise, and bought new episodes now and again. It was great.

But it didn’t last. Just before the release of the barely-changed third-generation Apple TV this month, the cable TV topic came up again, and—after intense discussions—we signed up again at an aggressive promotional price. Service resumed two days later. Everything we’d been missing, to use those words collectively and somewhat ambiguously, suddenly flooded back onto our television screen. Shows we would never have paid individually to watch were now available live, or for immediate DVR access, without iTunes’ “next day” or Netflix’s “next season” lag time. The channel guide lit up with hundreds of options to page through one at a time, half-hour by half-hour, and we were back to a remote control with dozens of buttons to hunt through and learn. Apparently, the little yellow triangle does something important. And if we want to record a show, the little red “Rec” button might not do it. That sort of stuff.

After a year without cable TV, the first night back was interesting. We took turns with the remote, going through channels, resting on whatever intrigued one of us. After 20 minutes of hunting, my wife settled on “Khloe and Lamar” with some initial excitement, but was thankfully so nauseated after 15 minutes that she changed the channel. She vowed, however, to return to the E! Network in the near future. As she hunted for shows or movies that sounded good, she discovered that our cable provider’s TV guide was littered with channels that were locked with additional charges, unwatchable unless we upgraded our subscription by $10 or $15 per month—each. After surveying all the options, she determined that there were actually only four channels she wanted to watch. Just as was the case before, channel surfing was quickly becoming boring, so she handed over the remote. Making the best of the situation, I started hunting for new episodes of shows we’d previously purchased through the iTunes Store, and set up the DVR to record them. We could make this monthly subscription worth paying for, if we used it correctly.

Yet within several hours, the Apple TV was back on, Netflix was taking over the screen, and we were back to our prior routine—find an interesting show, press a button, and start watching it. Simpler. Better. Immediate access to older content. And it’s been pretty much that way for the past two weeks now. We’ve flipped over to cable TV only a handful of times, and then mostly to watch DVRed episodes rather than live content. We may wind up cutting the cord again. Maybe not.

Since Apple’s working on iTV, a new television set that is expected to offer considerable functionality beyond the current-generation $99 Apple TV accessory, iLounge’s editors have spent a lot of time thinking about what the set will look like, whether it will connect to legacy television cables or accessories, and how it will work. Everyone assumes that it will deliver a better TV experience, and we’d bet that will happen. But, having failed to supplant cable TV with its existing “hobby” Apple TV devices, the critical question facing Apple is how it will manage traditional cable television content alongside iTunes, Netflix, and other on-demand services. Many users, particularly families, won’t even consider cutting cable service. Some—including most of us—have continued to want basic network channels simply to have live access to local news in the event of an emergency. An iTV without a coaxial cable plug would be bold, disruptive, and frankly desirable for those of us who aspire to permanently “cut the cable.” But it might also be seen as an outright declaration of war by Apple against traditional cable television, and one that the company might not be interested in fighting.

My opinion is that Apple should take on the fight—and do what it takes to win it. Cable companies have done a fine job of physically laying cable, and in many places, do a reasonable enough job of maintaining their wires that customers generally don’t have to worry from day to day about whether their TV, Internet, or digital phone service will work. But the cable company model of forcing bundled channels, pushing bundled services, and then severing content during revenue fights with providers feels broken to customers. It’s bad enough that so much of the content is garbage, but even worse that people are effectively paying to subsidize the bad stuff rather than directing all of their attention and dollars towards what’s good. Though paying a la carte or on a subscription basis for specific content isn’t ideal, at least it directly rewards actors, writers, and directors who are doing good work. That’s precisely what the iTunes Store has done for music; even if you don’t personally like the artists who are succeeding, you have to acknowledge that they’re successfully appealing to audiences, and getting paid for it.

Unfortunately, Apple has had a tough run with video content ever since it started to add TV shows and movies to the iTunes Store. The company’s arrogance and market dominance with music were blamed for the iTunes Store’s baby step approach to building its video content; regardless of the reasons, the video industry clearly moved slowly and distrustfully rather than progressively. As a consequence, iTunes’ availability and sales figures for videos were always unimpressive by comparison with its massive music library, but then apps came along and provided Apple with a new and even more amazing yardstick that distracted people somewhat from the movie and TV industries’ grumbling approach to offering content. Typical of their approach was noted television executive Les Moonves’ dismissal of Apple’s plans to offer TV subscription services, and statement to Steve Jobs that for all of his expertise elsewhere, Jobs didn’t understand TV. And typical of Apple’s approach was the company’s recent, selective introduction of 1080p content and iTunes in the Cloud movie streaming and redownloading support, both with decidedly uneven support from content providers. Apple appears to be trying to do what’s right by customers, and somewhat embarrassed by the reluctance of its partners, pushing them forward as much as it can. If it launches iTV, it will attempt to evolve the television business in an even bigger way; the only question, really, is how far it will go.

There’s no single model for television subscriber behavior that describes everyone. One of iLounge’s editors suggested today that he would not give up his subscription sports packages and HBO for anything. Two of us have all but completely given up cable without any regrets. And another, Jesse Hollington—most likely the biggest TV watcher of all of us, albeit now largely through iTunes—proudly announced this morning: “I have officially cut the cable.”

“I suspect that this is not going to end well,” I told him, describing our own struggle in keeping the cable cut. But if Apple gets the iTV out this year, and makes the right content deals and user interface choices, perhaps we’ll all be surprised by how quickly things change and get better. The question is whether the iTV becomes a conduit for coaxial service or an alternative to it. In order for Apple and consumers to truly win, iTV needs to be more than just a screen at the end of the cable companies’ wire, despite its partners’ reluctance. We suspect that challenge is the most critical one Apple is working through right now. Does it integrate traditional cable TV to please cable companies, or completely redesign it to delight customers?

What do you think? Is traditional cable (or satellite) support a necessary feature if Apple releases a TV? Or can it cut that wire and still win you as a customer? We’re interested in hearing your thoughts in the comments section below!