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The money will come from the licence fee.
Worldwide is not supposed to use a cross-subsidy from the licence fee to compete unfairly.
The BBC took £3.5 billion from the licence fee last year.
At its heart would be a free offer, with BBC content funded from the licence fee.
The BBC receives a guaranteed income of £3.7bn per year from the licence fee payer.
"Its turnover [of nearly £5bn] easily outstrips the revenue from the licence fee.
When cuts led them to withdraw funding, it was left to the BBC to fund it from the licence fee.
The BBC should always remember this and understand how it looks from the licence fee payers' point of view.
From the licence fee, the government wants a £20m fund for which the BBC's commercial rivals can bid.
"We have received complaints that the fine will be paid for from the licence fee," it said.
Elstein's view that subscription should gradually take over from the licence fee was first aired in the 1980s.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com