French Letter #1 - Funding the BBC

Thumbnail image for thumb_white.gif‘Allo, ‘Allo

Those of you who have been following my Tweets will have noted my journey through France to my sisters appartment (many thanks are in order). During the journey I had quite a heated discussion on the future of the BBC with a travelling companion. 
To boil down the essence of the argument to its critical components the question is around the Corporation’s funding and is goes as follows; 

if the BBC is to continue to do what its it doing at the moment (commissioning programs, developing broadcast and internet technology, training and nurturing technical and artisitc talent) is it sustainable to continue to be funded by the licence fee (a tax to all intent and purpose) on nearly all UK residents?
There is a desire among many to see the end of the licence fee and with the ‘narrowcasting’  capability ( iPlayer) that is emerging with ever faster broadand and related technolgies, is it possible now to start to move to a service that allows consumers to build there own diet of BBC sourced material (as they say ‘Its your BBC’) and then be charged for this on a consumption basis?
This appears to be the only real alternative to the current set-up as the use of advertising in the UK by the Beeb would kill commercial broadcasters practically overnight.
With such a model the boundaries that are now being put in place to limit reception to the UK could be broken down and the broadcaster could truly deliver a ‘world service’.
Should this change-over in funding be started now, could it generate sufficient income to make the licence fee anachronistic and if not right away how could the change over be managed?
With the future of the Net being a principle means of content distribution this is a disucssion we all need to participate and that starts now.