By Torin Douglas
BBC media correspondent
Culture Secretary Tessa Jowell has delivered the government's White Paper outlining how the BBC should be run. It comes as the government prepares to renew the BBC's charter until 2016.
CPS:CROSSHEAD STYLE="cross1">WHAT IS THE BBC CHARTER?
The BBC is governed by a royal charter, rather than an act of parliament.
Mark Thompson has been the BBC's director general since 2004
This structure is designed to reflect the BBC's independence from the government of the day and the fact that it is owned by the British people and run on their behalf.
An accompanying agreement recognises the BBC's editorial independence and sets out its public obligations in detail. The charter and agreement are drawn up by the government and together they set out how the corporation should be run, structured and funded, and what its purpose should be, for a 10-year period. The first charter came into force in 1927.
WHY IS IT BEING REVIEWED?
The current charter runs out at the end of 2006, so the next charter will come into force at the start of 2007.
The charter review process is an opportunity to examine how big the BBC should be and what services it should provide; whether it gives audiences what they want and need; whether it makes a difference to people's lives and genuinely provides a public service; and what impact it has on commercial broadcasters and their output.
The Charter Review process examines the BBC's output
The review is carried out by the Department for Culture, Media and Sport, which has been canvassing opinion since 2003 about how the corporation should develop in the 21st Century. The BBC has also set out its own plans and submitted them to the government.
WHAT IS THE BBC WHITE PAPER?
The White Paper has set out the government's final policy proposals for the next BBC charter and agreement.
It stated the BBC must make entertainment a top priority but should not merely chase ratings or copy successful shows on other channels.
Culture Secretary Tessa Jowell said the BBC must make popular services focusing on "quality and distinctiveness".
She said the BBC would continue to be funded by the licence fee, that its next charter would last for 10 years, and that the BBC board of governors would be replaced by a new BBC Trust, working with a strengthened BBC board of management.
Culture Secretary Tessa Jowell is responsible for the White Paper
Each BBC channel or service will have a licence setting out its purpose and main characteristics. The BBC Trust will have the power to review the licence if it believes the service is not fulfilling its role.
New services or "significant" changes to existing services will be subject to a public service test before being approved by the Trust.
This will weigh up their public value against how much they hurt their rivals, with media regulator Ofcom carrying out a market impact assessment in each case.
HOW DOES THE CHARTER AFFECT VIEWERS AND LISTENERS?
For all BBC viewers, listeners, website users and licence-payers, the BBC charter is important for two main reasons.
It determines how the BBC is paid for - currently by a licence on all households with a television set - though the level of the licence fee is decided separately.
The BBC has been criticised for chasing ratings with populist shows
It also shapes the types of service the corporation provides on TV and radio and the content of its websites.
Some think the BBC has been too occupied with chasing ratings through populist programmes. They believe its public service role should be more clearly defined and imposed, particularly in the multi-channel digital world in which many more commercial services are available.
That could mean more focus on news, documentaries, culture and community issues, for example, which are seen as beneficial and important to the country as a whole.
WHY IS IT IMPORTANT?
The BBC is the UK's largest broadcaster and website operator. It has a major impact not just on its audiences and the country's political, democratic and cultural life but on the rest of the country's media industry.
For example, the charter looks likely to give more work to independent TV production companies. The commercial radio companies say if the BBC is allowed to become too powerful, some of their stations could close.
WHAT WILL BROADCASTING BE LIKE IN 10 YEARS?
By the time the next charter runs out, in 2016, the broadcasting landscape will be radically different.
Between 2008 and 2012, the government plans to convert every TV region from analogue to digital TV. Every home will need to buy new equipment to receive the digital signals, which will bring many more channels than the analogue signal.
BBC TV ratings have declined as multi-channel viewing, through services such as Sky Digital and Freeview, has become more popular - 70% of homes now have multi-channel TV.
The BBC has been testing an online television service
The popularity of digital radio is also increasing and the BBC is also making much of its material available "on demand". Much of its radio output - and some of its television - is already available on the web, with some programmes available for download and podcasting. Its news coverage can be found on mobile phones. It has also been testing a system of making its TV programmes available to download via the internet.
The pace of technological change means no-one can predict the challenges the BBC is likely to face by the time its existence next comes up for discussion.
WHAT HAPPENS NEXT?
Now the White Paper has been published, there will be a further period of consultation, including a debate in Parliament. The Royal Charter and Agreement will be published before the end of the year.
Separately, the government must decide on the length and level of the next licence fee agreement, starting in April 2007. Every year for the past six years, the licence fee has risen by inflation plus 1.5%.
This above-inflation increase was to help pay the costs of the BBC's new digital services, designed to encourage viewers to switch to digital TV.
The BBC has now asked for an annual increase of 2.3% above inflation, until 2013.
WHY DOES THE BBC WANT A RISE IN ITS LICENCE FEE?
The BBC says it needs the money to meet future challenges, in a world in which broadband internet and on-demand services will become widespread.
Its plans include the introduction of new local TV and radio services, opening up its radio and TV archives to the public, and making its programmes available for free on the internet in the UK for up to seven days after their first transmission.
It also plans to invest in high-definition television services - Sky will introduce these to the UK later this year.
The BBC says it needs £5.5bn to fund these plans. It says it can contribute £3.9bn through efficiency savings, but it is asking for the rest to come from a licence fee increase.
Separately, the BBC has been asked by the government to fund some of the costs of converting the UK to digital TV. It is asking for an extra increase worth £500m to fund this - although the proposal has been criticised by a House of Lords committee.