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In its recommendations on the future of the BBC sent to the Department for Culture Media and Sport this week, ISBA attacked the BBC, accusing it of causing huge damage to the UK advertising industry and claiming that its funding through the licence fee is unsustainable.

ISBA said that maintaining the BBC's status quo was not an option for advertisers. It set out two models for the BBC, one of which would free it of its public-service broadcasting remit and allow it to compete in the commercial market, seeking alternative revenue sources.

An ISBA spokesman said this option might involve at least partial funding of the BBC through advertising. This view is not supported by the Institute of Practitioners in Advertising, nor many individual advertisers and media buyers, who say there is insufficient advertising revenue to fund the BBC, even partially.

They claim that to do so would cripple the existing commercial broadcasters' business models and force them to slash programming budgets, leading to a cut in the quality of the UK TV industry.

The second BBC model proposed by ISBA is that it retains its licence-fee funding but has a tighter public service remit imposed on it.

It argued that the BBC often breached its existing public-service remit and acted unfairly in direct competition with commercial outfits. Specifically, it pointed to the BBC's scheduling of Fame Academy against ITV's Pop Idol and the move of the BBC's evening news bulletin to 10pm, which, it said, constrained ITV in its prime-time programme scheduling.

ISBA also complained about the BBC's cross-promotion of its media interests, pointing to a magazine industry study that estimated that some BBC magazines benefit from £4m of free promotion.

ISBA director of media and advertising Bob Wootton said the BBC operated largely unchecked by its board of governors and proposed that the governors be replaced by an independent board of directors, supervised by Ofcom.

"The governors are appointed by the government and act as both cheerleaders and referees," he added.