Why does iTV need high bandwidth?

Raw bandwidth isn't a problem, it's the actual throughput (802.11g's actual performance is waaay less than 54mbps) and the ability of the signal to carry the data whilst avoiding interference and drop-outs.

The recent Macworld Podcast that deals with the iTV and wireless developments is a beauty and would answer your question with far greater accuracy and clarity than I ever could.

It's well worth listening to to get a handle on where wireless technology is going, for example, 802.11n isn't likely to be ratified till 2008 sometime. Next year there will be a "draft 2.0" version that will be the general idea of 802.11n but it still won't be the final version.

Anything marketed as 802.11n currently uses an older version of the draft protocol and as such isn't guaranteed to work with the newer stuff once the new protocol is officially launched.

The guy on the podcast suggests that whilst the Apple version of 802.11g - implemented in the Mac and Airport base stations as the barest form of the protocol without any proprietary extensions to boost speed would be "fast enough" it wouldn't really be "good enough" and that the problem could be solved in the short-term with a firmware update for all 802.11g-enabled Macs that would prioritise the streaming of media over the Airport connection.

Download the podcast, it's a really interesting interview.