It funds the BBC.
The original idea was to separate them from both Government and commercial interference, and it mostly works. I'm not entirely sure why it's called a licence though.
There is no commercial advertising or product placement on the BBC at all, and they are legally required to be impartial.
You wouldn't see anyone on (eg) Fox News laying into politicians on both sides, and this is a regular occurence on the BBC.
- It's expected for BBC journalists to lay into the BBC management on the BBC news if they appear to have done something daft. You'll never see that on a commercial channel!
BBC Worldwide is a commercial entity, and the BBC World Service is (was?) partially funded by the UK Foreign Office.
I'm very much in favour of the BBC, can you tell?
According to http://www.TVLicensing.co.uk
If you don’t watch or record television programmes as they are being shown on TV, on any device, you don’t need a TV Licence.