The BBC obviously wants to avoid losing their income stream, and the current UK government has made clear verbal statements that they not only want the BBC to avoid losing their income stream but that they also want a change to a more sustainable and enforceable model for this. The BBC has not argued that the current license fee is the only model, but they have argued that if this is the model that is going to be used, something about it needs to change if they are to have the income stream that they need.
It also isn't clear to me that the TV license is an outdated model in entirety. The notion that a country would levy a fee on more or less any instance of an activity in order to fund a non-commercial institution related to that activity doesn't seem strange to me at all. What is true is that the nature of the activity and the enforceability of the fee have both changed, and that therefore something probably does need to be done.
They will probably end up following the Australian model where it is funded directly by taxation. Of course this will undermine the BBC's supposed quasi-independence.
The BBC is ridiculously slow to pick up on trends. BBC pop radio (Radio 1) only came in as a response to pirate radio. Its streaming services aren't as good as they could be, and they have the double paradox of showing the same content over and over (such as "Dad's Army" made before I was born), while keeping a lot of classic content unavailable.
It also isn't clear to me that the TV license is an outdated model in entirety. The notion that a country would levy a fee on more or less any instance of an activity in order to fund a non-commercial institution related to that activity doesn't seem strange to me at all. What is true is that the nature of the activity and the enforceability of the fee have both changed, and that therefore something probably does need to be done.