I dont watch much TV (despite having basic cable channels) - but whilst I think the TV license is just (I wouldnt say tremendous value for money), I do somewhat agree that so many people wouldnt bother with BBC if they had the choice, or dont even watch TV but use it for purposes gaming etc.
The problem with presenting people with a choice is that so many would just not pay it and therefore the price of TV license would either go up and/or the quality of programing of the BBC would dramatically be cut.
I like the BBC, as said before, we have cable here, but I still prefer watching BBC news over the other news channels available. I only really watch BBC, Sky1 and C/E-4. That is when I watch it.