It's simply not true. The BBC is being deliberately misleading and extremely naive here. Naive because it's just not credible that the Hollywood studios and other rightsholders will boycott broadcast TV without encryption. They made exactly the same threat in the US, saying that without the Broadcast Flag, they'd stop licensing sport and movies to broadcast TV. There's no Broadcast Flag in the US. The broadcasts of sports and new release movies go on.
Misleading because the BBC's proposal turns over control of the design of TV receivers and recorders in the UK to an offshore consortium called DTLA, effectively turning it, not Ofcom, into the British regulator. DTLA and its guidelines will determine what you can do with your TV signals, not Parliament and copyright law. DTLA prohibits the use of open source drivers, which means that this will render obsolete all cards and other devices with that can be used with free/open software. It also prohibits unencrypted digital outputs, which means that you won't be able to buy a converter box that sends a HD digital signal to your SD Freeview box, so you'll have to throw out the old box.
Be sure to check out the comments where I'm debunking the BBC's talking points directly.
Some background: licence-fee-paid television must be free to receive in the UK. Unlike cable and commercial satellite signals, free-to-air television is carried on public airwaves, which broadcasters are allowed to use for free. In return, broadcasters are expected to provide programming on those airwaves, for free. And not just free as in "free beer", but also free as in "free speech." The terms and conditions for free-to-air telly are "Do anything you want with this, provided it doesn't violate copyright law."The BBC is encrypting its HD signal by the back door
But big rightsholder groups - US movie studios, mostly - object to this. They'd prefer a "copyright-plus" regime, in which they get to invent a bunch of new copyrights for themselves, without the inconvenience of public debate or parliamentary lawmaking. The way they do this is by slapping restrictive licence agreements on their media, or rather licence "agreements," in inverted commas. You don't get to negotiate these "agreements," they're imposed on you, and are sometimes even invisible to you.