Customers signed up for the cheapest service, then used illegally modified circuitry to watch all programming. Of course, that was in 1986. Security technology has improved since then. But so have the pirates' capabilities, as evidenced by the successful attacks on the DirecTV security system. Moreover, because each TV broadcaster could presumably procure its security cards from any manufacturers, there would be multiple card designs, some of which might be more susceptible to hacking than others.
Liability is another issue.
With the above scenario, each broadcaster transmits its own entitlement messages on its own channel. And it differs from satellite security systems, where all messages are transmitted on all channels. So no matter what channel you are watching, your security card knows what scrambled channels you are entitled to receive. But broadcasters don't want to carry entitlement messages for other broadcasters, for obvious competitive reasons. Not only that, but entitlement messages eat up channel capacity.