A minister warns that the BBC could become as defunct as the Blockbuster video chain unless it "moves with the times".
The Culture Secretary, Baroness Morgan said "accountability and value for money must be at the heart of how the BBC is funded", as her department launches a consultation on evasion of the licence fee.
People will be asked for their views on whether criminal sanctions for the non-payment of the licence fee should be replaced by an alternative enforcement scheme.
Baroness Morgan wrote in the Daily Mail that the Government's role was to "help public service broadcasters be better prepared to meet the challenges of the digital age".
Referring to Blockbuster, which fell into administration in 2013, she wrote: "As the world around us changes, our laws must change too.
"It will require the BBC to be innovative and to move with the times.
"We don't want a beacon of British values and world-class entertainment ending up like Blockbuster."
The BBC has said it cannot afford to take on the financial burden from the Government
Some people are cancelling their BBC TV licence
Baroness Morgan will also announce a flexible payment scheme for the TV licence, which will allow "vulnerable people, including those over the age of 75" to split the bill into instalments.
From June next year, the current scheme of all over-75s receiving free TV licences will be restricted to those who claim pension credit.
The move towards allowing flexible payments has been criticised by Age UK's charity director Caroline Abrahams, who said that the new payment scheme will not necessarily help those who find it difficult to afford a licence.
She said: "If you are a pensioner in the position of struggling to pay an extra £157.50 a year for a licence, being able to spread out your payments will not change the fact that the sum is simply unaffordable on your low fixed income."
In 2018, more than 121,000 people were convicted and sentenced for licence fee evasion and issued with an average fine of £176.
Any move to decriminalise licence fee evasion will not come into effect until April 2022, according to the Department for Digital Culture, Media and Sport.
In 2018 five people in England and Wales went to prison for not paying fines.
Former Culture Secretary Matt Hancock told TalkRADIO's Julia Hartley-Brewer: "The really big thing that is going on is technology is changing. The idea one piece of equipment is called a television and a different piece of equipment is called a computer is becoming increasingly out of date and certainly will be in the years to come. That's a policy challenge we'll have to grapple with.
"Vulnerable people shouldn't be sent to prison but instead the process of collecting what is owerd should be followed in this instance."
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