BBC director general Tony Hall wants the licence fee extended to include the estimated 500,000 UK homes where viewers do not have a TV set but watch corporation programmes on-demand on the iPlayer.
The move would enable the BBC to start charging the estimated 2% of households – 500,000 – in the UK which only consume on-demand TV content, rather than watching programmes live.
Hall used a speech at the Oxford Media Convention on Wednesday to mount a robust defence of the BBC and the licence fee, saying it was "one of the finest broadcasting organisations in the world" and "great value for money" reaching 96% of the population ever week.
Far from the licence fee being abolished, as some critics have argued, Hall said it should be extended to take account of the different ways in which people consume TV and radio in the digital age, on their computer, iPad or smartphone.
"One of the advantages of the licence fee is that it's flexible and has adapted over the years," said Hall.
"When and how best to take the next step is, of course, a matter for the government.
"Our view is that there is room for modernisation so that the fee applies to the consumption of BBC TV programmes, whether live on BBC 1 or on-demand via the iPlayer or other devices."
Hall said the BBC's latest research showed that the public was prepared to spend an average of between £15 and £20 for its services, beyond the £12 a month (or £145.50 a year) households currently pay.
He said the accusation that the licence fee was a "dinosaur from a pre-digital age, doomed to inevitable extinction" was inaccurate.
"Around 90% of all television viewing is still live. Well under 2% of households consume only on-demand TV content. And this number is growing only slowly," he said.
"Funding by licence fee therefore remains practical and sustainable."
Hall described the licence fee as "not a compromise, least-bad option. It underpins the success of the BBC".
Questioned about the statistic that 10% of magistrates' court cases are taken up by non-payment of the licence fee, Hall said: "Of course I'm not content [with that statistic].
"I go back to what I was saying: what better system could there be than a licence fee and if you remove any penalty on it then, you know, more people will say they won't pay … That is the system we've got."
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