More students than ever learn via the internet, but the human factor is still a vital part of any e-course

Business schools as we know them are outdated, US management guru Gary Hamel told 200 managers at the Queen Elizabeth II Conference Centre in London last month. Even the best business schools have very few faculties with a truly international reputation, because such people come expensive, and business schools "can't pay for them to stand in front of 80 or so students with a badly Xeroxed case study".

His vision of the future is that all teaching will be done on the internet, and will not be owned by a particular business school. There will be no tests to find out if potential students are MBA material: "Why would you want to stop people paying you money?" The hard part will be graduating.

That way, "everyone will be taught by the best business brains in the world. And that would solve the branding problem. MBAs would no longer rely on the reputation of their business school, but on the reputation of who taught them."

But the real world, according to those who run internet MBAs, is not as simple as management gurus think. Richard Wheatcroft, who leads the MBA course at the Open University, thinks we tend to be dazzled by the technology. He says we have passed the stage of technophobia, and are now at the stage of technophilia - thinking the technology can do everything. "We need to get to the third stage, using it as a way of getting the right tool for the job. If you have facts to impart, the internet is a good way of doing it. But if you are thinking about management, sooner or later you have to get together with other people."

So the OU insists on residential schools for all its students. MBA students have about six days a year on residential courses. The OU is by far the biggest MBA awarder in Europe, graduating about 1,200 students every year. The next biggest is INSEAD in France, with about 360.

The Association of MBAs refuses to accredit internet MBAs which do not have this residential element, which is the main reason why, of the 17 business schools in Britain offering internet MBAs, only seven have accreditation.

"Some schools are simply delivering the MBA on the internet," says Dr Robert Owen, manager of AMBA's accreditation services. "It's much better when the internet is used to enhance the MBA, as the Open University use it."

"The time may come when you could run an MBA without these residential schools, but it is certainly not here yet," says Professor John Arnold, director of Manchester Business School. "I watch how my children are communicating over the internet. They don't feel the need that our generation feels to meet face to face.

"But in the culture I'm comfortable in, it would be very difficult to deliver the MBA I want to deliver without face-to-face contact. The MBA includes simulating business experience, and there must be interaction between students. It's all very well for Gary Hamel to deliver a lecture to students around the world, but how will he answer their questions?"

Manchester Business School has for some years run a distance learning MBA on finance, jointly with the University of Wales School of Accounting, Banking and Economics. They run workshops in several locations all round the world in order to provide the necessary face-to-face contact.

John Bothams, who is researching the use of technology for teaching at the University of Strathclyde Graduate School of Business, believes all distance learning programmes must have a human element.

At ESC Grenoble, which specialises in e-business, the director, Professor Jean-Paul Leonardi, says: "Distance learning often provides no more than the illusion of accessibility. As any frequent user of e-mail knows, there is a world of difference between sending a professional e-mail, or posting a question to a forum, and getting a thought-out response. Internet technology has rarely proved efficient in building virtual communities.

"The real value of open learning is not just in hardware or software, but in faculty and administration capable of applying these technologies to add value to higher education."

So, the top UK universities and business schools are looking with some suspicion at the government's plan for an e-university. The idea is to gather together a consortium of universities offering degrees on the Web to ensure Britain gets the revenue from more overseas students paying full cost fees. But the Government is referring to it as "a virtual university", and ministers have made it clear that they have the American model of virtual universities in mind. This has fuelled fears that all the teaching will be done on the internet, without any face-to-face contact, because it is cheaper.

Those, like Gary Hamel, who think that internet MBAs will do away with all the traditional means of teaching are probably mistaken. But it would be equally wrong to suppose that the internet is not going to change the MBA radically. Each year a bigger proportion of the world's MBAs will have studied by distance learning.

But the traditional business school-based MBA is not ready to disappear, and the expression "internet MBA" is potentially misleading. Some of the newer internet MBAs are delivered entirely on the internet. But distance learning MBAs were pioneered in Britain by the Open University long before we had the internet.

Mr Wheatcroft says: "We have quite strong evidence that some sorts of information are still better given in paper form. When you are on a subway, a book is very handy." At Henley Management College, Britain's other MBA distance learning pioneer, Professor Colin Carnall, says: "Distance learning means distance from the tutor. A book is distance learning."