BBC NEWS Entertainment Broadcasters 'should bid for fee':
"The BBC's licence fee should be removed and opened up to bids from other broadcasters, a report has recommended.
The paper concludes that the BBC spends most of the funding on entertainment shows and fails to fulfil its public service broadcasting (PSB) commitments."
It would allow the BBC to bid for the money, while recommending the sale of some channels including BBC One.
A spokesman for the BBC Trust said: "This is one of the many different contributions to the PSB debate."
"In recent years rather than encouraging competition on audience share, the Trust has used a basket of different measures including quality, originality, and value for money to measure the BBC's performance," he added.
The report, called Auntie's Dying: Long Live Public Service Broadcasting, also suggests the sale of BBC Three, Radio One and Radio Two.
It was written by Labour MP Frank Field.
Remaining services including BBC Two and Radio Four would still be financed entirely by public funds, it advocates.
With the licence fee placed in the hands of a new independent commissioning body, broadcasters would pitch ideas for public service programmes and gain funding accordingly.
Public service broadcasting entails programmes that a broadcaster would probably not make if they were only concerned with getting big audiences and making profit.
These include news, children's broadcasting, arts and religious output.
In government proposals outlined last month, ITV could gain a share of the BBC licence fee, while the corporation has warned this could damage output.