According to USA Today, Apple’s plan to offer an a la carte iTunes TV service—essentially iTunes as a full-blown customizable cable provider—is the main stumbling block behind the iTV.

The hardware is reportedly a go—Apple design chief Jonathan Ive is said to have a 50-inch iTV prototype in his off-limits studio. However, software is the issue, with the likes of Fox and Universal reluctant to offer their content to iTunes and screw over traditional subscription-based cable companies such as Comcast. Not to mention, if users can build their own channels, the ad structure for TV programming requires wholesale changes.

TV manufacturers are worried, too. Internet-connected TVs are currently a $70 billion-market, and, according to industry forecasters, Apple could take a quarter of it if they enter the field.

[via USA Today via Tech Crunch]