Will it undermine the BBC?
The BBC didn't get to be one of the highest rated sites in the world because of subsidy - just that it is the very best at what it does (well apart from the odd iPlayer debacle).
People who use mobile phones, PDA's etc see the difference between the BBC's level of professionalism and the rest. As a profesional web designer I have followed the BBC website for close on a decade and a half. It has been a reference for doing stuff well and moving on. Bit like in conventional broadcasting - it sets a standard for the competition to try and match (even occasionally exceed).
Without the BBC website - and particulary the news.bbc.co.uk - we would be poorly served by the inadequate ITV and the biased NI empire (just take a look at Fox News for fair and balanced reporting).