The licence fee is a prickly topic that sees people vigorously defending the BBC or attacking them for having an unfair advantage over other stations… or in some cases, people don’t like the way it is spent.

Well, according to one thinktank called the Adam Smith Institute, the £3.5bn annual licence fee should be scrapped and replaced with a voluntary subscription service.

The report, Global Player or Subsidy Junkie? Decision time for the BBC, reckons that Auntie could be offered a “transitional guarantee” of income from 2012 when viewers would first be told they didn’t have to pay the licence fee.

An interim annual fee of £145 (the current cost of the licence fee) would be charged up to 2015, the report proposes, after which BBC services would become subscription-only.

David Graham, the report’s author and a former BBC producer who now runs the media consultancy Attentional, tells the Guardian that the BBC “invests heavily in opinion management and capturing UK regulators rather than looking outwards towards the international media market”.

“Continuing with the current funding model means justified hostility from the rest of the industry, contraction and decline for the BBC,” he added. “The new government seems ready to rethink fundamentals. I hope this paper will help to encourage a serious debate, at a critical time, about a very important British institution.”

In terms of the licence fee the report argues that the BBC would, over a “limited period of time”, allow licence fee payers to “either lapse or switch to voluntary subscription”.

What are your thoughts?