The sound on 7flix is HE-AAC. HE-AAC is used in situations where there is limited bandwidth and the audio stream is under 128 kbps (DAB+ uses HE-AAC, aka AAC+ or AACplus). It sounds bad/artificial because at sub-128 kbps bitrates, there is insufficient bandwidth to carry the full 48 kHz (i.e. frequency response up to 24 kHz) sampling for the audio track. I think the HE-AAC streams actually have 22 kHz sampling (frequency response up to 11 kHz) and anything above 11 kHz, HE-AAC essentially guesses at what it should sound like based on harmonics. At even lower bitrates, say around 48 kbps and lower, even more drastic bandwidth-saving measures are used (i.e. HE-AAC v2). The actual audio stream becomes monaural and the codec esssentially takes a guess at what the stereo image should sound like (called parametric stereo) based on some low-bandwidth channel intensity information.
Refer to my previous post here for more information: Car Radios - #31 by tvcl
MPEG-4 provides better image quality than an MPEG-2 transmission at the same bitrates; however, the bitrate they’ve been giving 7flix is much lower than that.
Why not? Technically (legislation aside), any digital content can be broadcast within the 23mbps they have. Just as with your Internet connection, you can have two different streams playing from two different websites and of different resolution/codec.