Welcome to the new world of Disney degrees

New technologies mean new ways of learning - and British universities need to sharpen up their approach if they're not to be left behind in the virtual classroom. By Lucy Hodges

Suddenly universities in the United Kingdom are waking up to the fact that they have new rivals out there in the higher education marketplace. Disney has its own "university" in Florida. Microsoft has one. British Aerospace has set up a "virtual university", and Anita Roddick, the Body Shop supremo, has founded the New Academy of Business to promote her New Age and ecological ideas.

Disney's was the first corporate university, and remains one of the largest corporate training organisations in the world. Its job is to train Disney World's 42,000 cast members. They are taught skills as diverse as IT and cooking. Meanwhile, Disney managers are given training at some of America's top business schools via satellite. Colleges taking part in the scheme include Babson, Carnegie Mellon, and The Wharton School.

America, in particular, is exploding with new higher education competitors, the most successful of which is the University of Phoenix. In the last few years, it has grown phenomenally. Today, it has 48,000 students undertaking vocational degrees in areas such as business, IT and teacher training, via new distance learning techniques, including the Internet.

The University of Phoenix gives working adults access to learning wherever they happen to be. A private institution, it is immensely profitable. The university's parent company, the Apollo Group, recently reported quarterly profits of $12.8m (pounds 7.5m) before tax on sales of $86.5m (pounds 50.6m). Such figures terrify American academe. What if other other entrepreneurs were to muscle in on their territory and make a success of it?

Another American virtual institution being watched closely is the Western Governors' University, which opened this year as a way of reaching a dispersed population of students in 17 Western states of the US. With corporate offices in Salt Lake City, and academic offices in Colorado, it aims to enroll 95,000 students by early next century. Like the University for Industry being set up in the United Kingdom, it doesn't employ lecturers or develop its own courses: instead it acts as a broker, introducing students to courses provided by other institutions.

A similar initiative has been launched by the state of California, which chose not to join the Western governors' enterprise. It is called the California Virtual University, and it offers 700 courses from 81 public and private institutions. These represent simply the tip of an iceberg.

What is going on in America - and what could happen in the United Kingdom - amounts to a revolution in the way people learn. It is a real threat, or an opportunity, depending on your point of view. (The Open University is already responding. See The Open University heads for the frontier, in EDUCATION, 2 July, 1998.)

If new private sector universities were to set up with new technology, and successfully attract a new generation of post-school and adult learners, it could jeopardise the existence of the traditional university. Similarly, if an American university with a good brand name, such as MIT or Stanford, decided to break into the postgraduate market in the UK, with or without help from a giant American company like Microsoft or Time Warner, it could have serious effects on British universities. How many students, and how much income, would our business schools lose if Harvard were to market a Masters in Business Administration globally on the Internet?

That is why the vice chancellors' committee is taking the subject very seriously. Last month, it devoted workshops to the subject at its residential conference, and it has now decided to commission a big research project into what it calls "other kinds of learning providers in our knowledge society".

According to a senior policy adviser at the committee: "It's a fast-changing scene. As far as we can establish, there's no up-to-date description of what the market currently is and how it might develop, so we will be commissioning research into what kind of challenges and opportunities it will provide for British institutions; how it will impact on our domestic market, and what it will mean for British universities overseas. These issues need to be explored with some rigour, and they need to be explored fairly quickly."

Most university bosses are relatively ignorant about the new developments. But Tim O'Shea, the new master of Birkbeck College, London, is not. As a former pro-vice chancellor and professor of IT in education at the Open University, he has first-hand knowledge of the new competition. He fears that private companies - in co-operation with individual universities - might use the new technology to cream off some of the most financially viable parts of the higher education market. Such areas include business and law.

"The risk is not that complete private universities using technology will come in, replacing the ones we have at the moment," he says. "The risk is they will take parts of our provision and leave us with the hard, expensive bits. There's a real possibility of that happening. If it does happen, we won't have the flexibility of resources we have now."

Birkbeck College, for example, has on-line teaching, which makes heavy use of computer conferencing in organisational psychology. It would be very annoying for Birkbeck if someone began to compete in that area. O'Shea worries that, if Birkbeck lost its competitive advantage in this niche market, it would not have the money to invest in other less glamorous areas, for example, helping people on to the first rung of the higher education ladder via access courses.

The answer, he thinks, is for higher education institutions in Britain to club together, just as the 17 Western states have done in the US. If UK universities could collaborate, O'Shea argues, they could lay on Internet MBAs, and nursing courses and law degrees, at a reasonable cost, while at the same time maintaining high standards of OU-style student support. Such vocational degrees, marketed under a brand name of UK plc, could then compete with any of the dynamic new competition. On their own, however, no British university would have the money to set up in competition.

Alastair MacFarlane, former vice chancellor of Heriot-Watt University in Edinburgh, and the man chairing the advisory group which is establishing the University for Industry in Scotland, agrees that universities need to act. That's because, otherwise, they will be overtaken in the race to provide the professional qualifications needed by groups such as social workers, nurses and engineers.

People are going to be taking those qualifications throughout their working lives, he says. And the workplace is going to be the place where a lot of them do that learning: "Unless higher education responds to this - and it means giving people what they want, not what you think they want - the provision will be made by professional groups themselves," he argues.

"The universities have always been relaxed about this, because they think the statutory powers they have to grant certain kinds of qualifications will allow them to continue to exercise their monopoly. But a very worrying development for them must be the emergence of British Aerospace and Motorola universities. They pose a real threat. I don't think the real seriousness of the threat has dawned on most universities."

It's complacent to think that British Aerospace University would never be given the statutory powers to award its own degrees, according to MacFarlane (at present it offers four masters degrees in subjects such as aircraft engineering, in conjunction with established universities). Certainly, he believes the professional associations such as the Royal College of Surgeons would be given statutory powers.

So, universities should act quickly to provide these qualifications before others do. Heriot-Watt is one university which has acted. A decade ago, it mounted a distance-learning MBA. Within five years that course had attracted 12,000 students (three times the 4,000 students catered for on its Riccarton campus). This MBA is the single most important feature of the university's activities and generates most of its profit, according to MacFarlane. Heriot-Watt is now working up distance-learning and Internet courses in its niche markets of petroleum engineering, brewing and distilling, and financial mathematics.

But there's another way in which universities must rise to the challenge presented by the new technologies. They need to harness those technologies to improve learning for students. Otherwise, students will vote with their feet and go where their needs are met best.

"The new corporate universities are a huge threat to established universities," says David Matthew, director of the Body Shop's New Academy of Business. "Companies are setting up their own universities because they're not getting what they want from higher education."

The Body Shop has devised two masters degrees with Bath and Lancaster universities. Those institutions were prepared to move fast, according to David Matthew. Many others are not.

However, not everyone sees the new developments as a threat to traditional higher education. British Aerospace denies that it is threatening the position of established universities with its new virtual university. "We see ourselves as being a bridge between industry and academia," says Jon Allen, the business development manager of the company's virtual university.

"Our raison d'etre is to improve the company's competitiveness. We're using traditional universities for that purpose. We need their expertise. This is a collaboration, not a rivalry."

But the threat remains, particularly from private entrepreneurs, such as Phoenix, and from elite American universities which might beam vocational degrees over the Internet at British adults.

Christine King, vice chancellor of Staffordshire University, says: "We do need to be seriously aware of what is going on. Rather than fighting one another over league tables, and whether we're 'new' or 'old', we need to combine together to compete internationally under the brand name of 'Higher Education UK Ltd'."

When the vice chancellors receive the results of their research, as yet to be commissioned, expect some action.