One of the key reasons we all don’t have 100 megabit broadband connections to our homes is what is known in the telco industry as the last mile. The last mile is the gap between the fat, fiber-optic network pipe that runs through every city and your home.

In the digital entertainment world, the big problem is what I like to think of as ‘the last 10 feet’ - the distance from your computer to your flat screen tv. The problem is not a technical one — a trip to Best Buy is all anyone needs to get hooked up — it’s a business problem. For digital distribution to go mainstream, there needs to be something as simple and easy — and ubiquitous — as the iPod / iTunes combo was for music. Best Buy is not the answer for my mother, which is my general litmus test.

So why is it a business problem? Studios and other distributors who control licensing are sitting tightly on the digital rights to their films. The pipes are empty without Spiderman and Pirates of the Caribbean. And the people who own the spigot want to make sure they are the ones who control things like pricing and windows — and not the plumbers (Apple, Microsoft, Netflix, etc).

The issue is the content owners don’t actually understand (or care) about how people want to consume entertainment in a digital world. Since the plumbers already spend a lot of time in your home and day-to-day life, they have a much better intuitive grasp for how you want to watch, listen, and pay.

So it’s a business problem. That is, until someone comes along with enough market share to really throw some weight around, as Apple finally did with music. And while they have way more than half the market in the digital world, that market today is still very, very small.

The contenders to date have been Apple, Netflix, Amazon, and recently Hulu. At the beginning of 2008, all were primarily small-screen-only solutions (TiVo members can watch Amazon Unbox titles on their TV, but that is a very small part of the very small market). Then, in January the Apple TV finally got real with rentals and HD. Everyone (except Hulu) followed suit with announcements of impending big screen solutions.

The problem now becomes that everyone is going to want to be the one to sit between your computer and your TV. I say the one because if I already have a DVD player, cable box, and Wii, I’m running out of shelf space and HDMI inputs to my TV. This is partially why Vudu is in trouble, and also why TiVo, having not won the war, is going to lose.

Interestingly enough, the folks out in the lead here are at Microsoft. As of last month, there have been over 19 million Xbox 360’s sold. Each one is both broadband and HD-compatible, and the online store sells feature films on demand. Microsoft’s problem is that they’re not Apple, who clearly gets my mom in a way that Microsoft never, ever will.

Which brings us to Netflix. Yesterday, Netflix finally made the last 10 foot leap with the Roku Netflix Player, a $100 set-top device that lets Netflix subscribers stream any of the 10,000 Watch Now titles available on Netflix to their TV. Early reviews are extremely positive. Saul Hansell of the NYTimes Bits has a good breakdown of why here.

What’s smartest about Netflix’s move is that they decided to stay out of the hardware business themselves. The last 10 feet will be a bloody battle, and aside from the one winner, the real beneficiaries will be those with a) great selection and b) the ability to guide audiences to discover what they want. Which is what Netflix does just about better than anyone on the planet.