[soneil]

They already selectively show/hide ads - for example, I'm in the Republic of Ireland, and see ads on the BBC News site.

It's a bit more complicated than that. BBC in the UK aren't allowed to operate outside their charter - they're severely restricted in how much they can compete with private commerce.

BBC Worldwide is the beeb's commercial arm, who do exactly this - outside the UK, where they're competing fairly as any other commercial venture.

So Worldwide aren't allowed to operate within the UK precisely because of the licence fee - it'd be unfair competition. It's not just because they're shown ads - it's simply because the content is produced by their commercial arm, so finds itself on the wrong side of the home/worldwide silo.