THE BBC faces losing hundreds of thousands of pounds in licence fees because of a legal loophole that allows viewers to watch television on the internet for free.

Soaring take-up of broadband and technological developments are making internet-streamed television a reality.

Last summer, for the first time, the BBC broadcast coverage of the Olympic Games live on the internet for people to watch on their computers. It has promised to put further broadcasts on the internet as part of a corporate social responsibility drive aimed at boosting broadband take-up and preventing users “falling on the wrong side of the digital divide”.

However, although the licensing authorities maintain that anyone watching television on their computer would need a television licence, Ofcom, the communications regulator, and the Department for Culture, question that claim.

Ofcom says that there is a grey area as to whether a licence is required for watching television on the internet.

A spokesman for the Department for Culture said initially that a licence would not be needed and that it was “monitoring the situation”.

However, it later said that it would be “inappropriate for the Government to comment on licensing requirements . . . for specific types of equipment”.

The uncertainty leaves the BBC open to the threat of thousands of households avoiding the licence fee by watching television on their computer. To watch BBC IP-streamed broadcasts viewers would need only a high-speed broadband connection and a personal computer.

The emergence of such a loophole — even though broadcasts on the internet are still limited — is yet another concern for the BBC.

It comes ahead of the publication of the Green Paper on Charter Renewal, which could be only days away.

It also follows warnings from broadcasting experts, including Dawn Airey, the former chief executive of Five, that Britain’s broadcasters are failing to keep up with new and potentially threatening trends. In a Royal Television Society speech last year, she said: “I don’t think the traditional broadcasting establishment understands the scale of the transformation that is taking place.”

So-called internet-streamed television has been trumpeted for many years. But without the fast “always-on” broadband speeds that are now available the picture quality was fuzzy and poor.

Microsoft has developed software that will enable telecoms companies to deliver internet protocol (IP) television. It is being trialled across the world. The group has said it envisages a world where “a number of different types of devices have IP-TV built into them from a television to a PC to a DVD”.

The growing uptake of broadband is also expected to be a trigger for the arrival of the service. Take-up of broadband has surged in recent months.

About 15 per cent of UK homes have a connection and another 200,000 homes connect each month. Broadband accounts for 38 per cent of all internet connections in the UK.

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