Improving SD rates

Ben's written to the blog asking the following:

Surely Virgin must get direct feeds from the BBC, ITV and C4 – especially in these days of on-demand offerings. If they do, why don’t they ask these broadcasters to increase the bit-rate of these feeds, and hence increase the quality to us?
It seems that SD channel bitrates vary widely on cable, which would imply they can be changed/increased.
The blocky SD picture quality on flatpanel TVs (although Virgin’s SD is the best) isn’t really a resolution issue, because when a still image is shown –like a photo – it looks clean and sharp. It’s only when things move that it all goes blocky – and that’s down to bitrates that were set originally for CRT screens – which don’t show up pixels anything like LCDs/Plasmas.

I suspect an answer may be that the main broadcasters produce standard feeds for all platforms (cable, satellite, Freeview) and producing a better feed for one would incur additional costs, but does anyone (more informed) know? I know the bitrates are adjusted dynamically to ensure (to some degree) maximum PQ and on Freeview the bitrates for the C4 channels is notably poor, but could they be improved at the upper end of the scale for cable?