I've heard/read a bunch of interviews explaining why HBO shows are of such high quality.
First and foremost, because HBO doesn't compete for advertising dollars, they can afford to gamble airtime on a show that might catch on through word of mouth rather than mountains of hype. Six Feet Under or The Sopranos would never last past a first season on a network, because the shows are an acquired taste with complex characters and story arcs (forgetting for a moment both shows are filthy at times)...advertisers are more likely to play it safe with another Law and Order, because they know will do decently in the ratings, if not spectacularly. The system is truly broken, because shows like Cheers or Seinfeld, which tanked horribly in their first seasons, would get axed for lousy ratings out of the gate nowadays.
Secondly, HBO makes a simple demand of its drama producers...characters don't have to be likeable, as long as they're compelling. You're never given the chance to dislike a character on a network show, unless you're supposed to. Contrast that to Beecher from Oz, Tony Soprano, or Nate Fisher...there are times you love them, and times they're totally scum of the earth.
Of course, there is a bit of an unfair advantage in that HBO shows don't have to adhere to censorship. However, networks have gone overboard and sterilized a lot of their shows. Compare the first two seasons of L&O to now. If I were an ignorant foreigner (being Canadian, I suppose I am), I would think that poverty and drugs are no longer problems in New York, because the only people that ever get murdered anymore are multi-millionaires living around Park Ave.
The true solution would be a system where networks don't force providers to charge exorbitant prices for utter garbage, before a subscriber is allowed to order HBO (i.e. you can't order pay TV without full-tier cable, no matter how little of it you actually watch)...at least this is the case in Canada. Of course, given who's in control, it'll never happen.
