The consultation will seek responses on whether to decriminalise evasion and give consideration to how this could happen.
What the cost is and how hard it would be to implement any alternative scheme?
A spokeswoman for the broadcaster, which celebrates its 100th birthday in 2022, said the licence fee ensures an "independent broadcaster".
What happens if people don't pay the licence fee?
Culture Secretary Nicky Morgan said that in an era of streaming services such as Netflix, all public service broadcasters "must adapt".
While recognising the huge creative output of the BBC and that it was seen as a beacon of British values, Morgan said that it was worth recognising that in 2018, the BBC still spent over four times as much on original United Kingdom programming as Netflix, Amazon Prime and all of the other subscription streaming services put together. "These are not easy issues and they will require some honest and at times hard conversations", she added.
"I truly believe that, no matter how well-funded the worldwide streaming giants are, British broadcasters remain essential".
This is the strongest indicator yet that Boris Johnson's government - one which has repeatedly questioned the pubcaster's funding model - is serious in its plans to reform the licence fee.
According to Morgan, accountability and value for money for taxpayers must be at the heart of how the BBC is funded.
The Secretary insisted that British broadcasters remain essential to the United Kingdom, no matter how much funding global streaming platforms have, and that PSBs are best placed to create content with British viewpoints and identities. "Our mission is to help public service broadcasters be better prepared to meet the challenges of the digital age", she advised.
Referring to collapsed video rental firm Blockbuster, which fell into administration in 2013, she wrote: "As the world around us changes, our laws must change too".
Asked if their moves are an "attempt to bully" the BBC, he replied: "I don't know".
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A public consultation on whether failure to pay for a TV licence should stop being a criminal offence has been launched by the government.
"It's time for an open conversation about how we consume and pay for media".
The BBC has said decriminalisation will result in more people evading the fee, costing it millions in lost revenue.
"If there are changes, they must be fair to law-abiding licence fee payers and delivered in a way that doesn't fundamentally undermine the BBC's ability to deliver the services they love".
Ms Abrahams added: "Many of the over-75s will lose their free licence are house-bound due to ill health and disabilities and are nearly completley reliant on their TV for entertainment, companionship and as a way to stay connected with the world". Everyone in the United Kingdom, and the Crown Dependencies, who watches or records television from any provider as it is broadcasted, and/or who watches content on BBC iPlayer, whether it is on television sets, computers or other devices, is required to be appropriately licensed. She also said it was important for the broadcasting sector to deliver for the whole of the United Kingdom, not just in London, and welcomed plans by the BBC to increase the number of staff located outside of London.
A supplementary licence for colour TVs was introduced in 1968. TV licence evasion in and of itself is not an imprisonable offence and will not lead to a criminal record in most cases.
However, it recommended against changing the criminal sanctions regime, saying decriminalisation could bring with it an increased risk of evasion.
There were 25,752,560 TV licences in force in the United Kingdom in 2018/19, according to TV Licensing.
Payment of the BBC's TV tax is policed by enforcement officers, who employ "detection vans" which can "detect the use of TV receiving equipment at specifically targeted addresses within minutes".
"If the Government decides to take it forward it will consider the impact of it in the context of the overall licence fee settlement, with negotiations beginning later this year". The annual fee is set by the government, rising in line with inflation for five years from April 2017.
However, this is changing from the start of June, when the BBC will become responsible for paying for it.