Peder Saether Symposium (March 9-10, 2000)
Professor Chris Curran Presentation
Prof. Chris Curran, Dean of Faculty, Dublin City University; Director, National Distance Education Centre, Ireland
When Diane asked me to speak at this conference, she asked if I would try to say something general. So what I’m going to do is to try to make some generic points, and then draw on some case studies and things I’ve been involved in to try to illustrate this. To begin with an apology, one of our Irish writers, George Bernard Shaw, once wrote to a friend and said, ‘I’m sorry to have sent you a long letter. I didn’t have time to write a short one.’ And I’m in that position myself this morning, inasmuch as I have a very large number of slides to try to get through this, but I’ll be moving through them very rapidly. This thing is coming up slowly; as my colleague here said, it was in a deep comatose state. And since I’m in that state myself, we’re in parallel. Technology again.
So maybe while we’re waiting on this, I’ll tell you a story. A colleague of mine, an economist, was walking in the Wickmore Hills quite near Dublin, and he came across a farmer with a very large number of sheep. He saw this as a challenge. He said to the farmer, ‘I bet I can tell you how many sheep you have there.’ And the farmer said, ‘You can’t.’ He said, ‘Yes, I can.’ And he said then, ‘All right. If you do, and you get it right, I’ll give you a sheep. But if you’re wrong, you’ll have to give me 50 pounds.’ That’s about $60. So he said, ‘Right.’ He hopped up on the wall and had a look at the sheep, did some counting. Got down and got up on the other wall. And he came back to the farmer and he said, ‘657.’ And the farmer said, ‘How on earth did you know that? All right,’ he said, ‘Take your sheep.’ So there the economist took it and started down the lane with this animal in his arms, and the farmer said, ‘Hey! I bet I can tell you what you do for a living.’ And the economist said, ‘What do I do?’ He says, ‘You’re an economist.’ So he says, ‘How on earth did you know that?’ He said, ‘Put down the dog and I’ll tell you.’ Now, the moral of this story is that you need to know what you’re trying to count before you start doing the sums.
So what I want to talk about very briefly is the institutional perspective and, in particular, I’ll be talking about some of the big open universities in Europe, partly because I know something about them; secondly, because we have good robust data on them; and thirdly, because what’s happening in relation to this whole area of ICT is, I think, very interesting. I’ll explain that in a moment. So to start off, I want to say something about generic factors influencing costs, and then something about the wider issue of institutional strategies, and then I will draw some conclusions.
What factors influence costs? Well, scale economies are very important, as we know. The usual argument goes like this: the cost of traditional teaching in the traditional manner has very low fixed costs, but the variable cost is very high, and when you use technology you get high fixed cost and low variable cost. There’s a breaking even point, which I’ve called ‘E,’ simply because everybody calls everything ‘E’ now, and beyond this point the unit costs are cheaper. That’s the normal argument. It’s a very simple model, which you’re all familiar with. Now, the point to note is that ‘E’ can be very big or it can be relatively small. We know, for example, that at the UK Open University it was around 23,000 students in terms of university overheads in the 1970’s. In my own system, it’s about 900. So it really depends on what one is looking at. It also really depends on the scale of investment, which is a function of the technology mix that you use, in terms of access to the technology, who is paying for it and so on, and the alternative against which you’re making the assessment. That’s very often where the sleight-of-hand arises in this.
I would describe this area as having what I call a very flexible production function. It’s often possible to mix the technologies, and there’s no better expert in this than Tony Bates, here with us today. The point worth noting is that even the virtual universities don’t rely exclusively on on-line instruction. There’s a very interesting one in Barcelona, which operates almost exclusively in on-line learning. It has all the usual things: a virtual campus, access to tutors on-line, collaboration among students in terms of learning, access to all the libraries in Barcelona and Madrid and Catalonia, a virtual marketplace for students to buy and sell things, and so on. It still retains on-line learning for a number of class meetings that use texts, cassettes, and CD-ROM’s, and it has an extensive network of local study centers in the area.
We need a lot more data on the scale economies of ICT. It is worth noting that there can be constraints on scale economies, even in the very biggest systems. This [slide] shows an analysis I did of unit costs in relation to student enrollment, in constant terms, at the UK Open University. You see the initial sharp decline in costs, which is fairly typical, and thereafter a certain leveling off. But why does it level off? The first thing worth noting is that most of these economies are at a course level, rather than at the institutional level. Therefore, that’s a critical factor for the open universities, and, indeed, for some of these on-line systems. Secondly, income; many of these institutions are state-funded, and hence expenditure is based on student numbers. You often don’t get these kinds of scale upon expenses, because the pace of course development exceeds the pace of enrollment. However, what’s really interesting is that there’s a kind of third phase that seems to develop, which is more erratic than the early stages, and there are a number of reasons for that, which we may be able to address in discussion.
Another point worth noting is that the scale effect varies dramatically between the different activities. This again is based on a study that was done by the Department of Education and Science at the Open University. Basically, what it’s showing is how costs change with a change in enrollment. Course development and production, as you would expect, remains fairly static; the cost of presenting and delivering the program rises with enrollment; and the cost of student support rises quite sharply. This is one of the big challenges in relation to the kind of education we’re talking about. We can model this kind of relationship very simply by looking at the kind of outputs, students or graduates; the kind of fixed capital that we have, the buildings and equipment and so on; the investment in course programs; and then the recurring costs which arise in relation to student-support systems.
There are many kinds of ways these universities seem to be going about containing fixed costs. In the case of the Open University in Catalonia, for example, they have made very substantial savings, in terms of accommodation, to have a central, very attractive, chateau-like building in Barcelona. They have a network of study centers, all provided and funded by other institutions, like banks or financial centers, and they have shared investment in the very heavy costs of software development to support the system. But there’s still a very substantial investment in equipment, and we have a real problem with obsolescence; I’ve been there two or three times, and each time I go back the equipment has changed.
The problem of containing the costs of content development and investment in courses applies to a number of institutions. Firstly, most of these institutions are heavily involved in this, but Barcelona, the Dutch Open University, the German Freun Universitat, among others, collaborate with external publishers. There’s joint development, in a number of cases, within the range of universities; we heard some of this yesterday. There’s an attempt to recycle components, particularly cost-intensive components. For example, at the Freun Universitat, they’re developing a very interesting on-line, computer-based component catalogue, of which we can talk more later. In some cases, although usually not in the case of the old universities, the course development is done by adjunct faculty, but who work with some full-time staff in the center, and, in many cases, a very substantial external subvention.
Of course, the range of courses is critically important. Often it’s a more limited range than you’ll find in the traditional university and is focused on areas of high student demand. We know, in fact, from work done in the Freun Universitat that the cost per course can vary a great deal between the different areas. The ratio between Economics and Electrical Engineering, for example, is about five or six to one.
Containing the cost of teaching is, as I’ve said, one of the critical factors. Very often this is done by attempting to develop the students as independent learners; by developing forms of collaborative learning which will reduce the demand on teacher time; by using adjunct faculty, as in the case of the University of Phoenix; or by using student mentors. There was a series of studies done under the aegis of the ALN programs here, and they noted various results in relation to the use of students, which are included, too. But there is a problem with user load. Quite a few of the studies have shown that the demand on users is significantly higher. Grevolumble, in the UK, has actually come up with some very interesting figures on this. There’s also the problem of the additional cost to students. Barcelona, for example, has a very interesting student loan system to try to overcome this.
In summary, we can say that the experience suggests that when courses are well-designed, adequately resourced, and efficiently managed, they are generally of excellent quality, and there’s a fair bit of evidence to support this. But we have to remember the central point, as Mark Law said 30 years ago now, that the measurement of education quality is at the bottom of all controversies about university productivity, so this is a critical issue which we’ve been talking about.
Much of the use of these technologies is optional. I carried out a survey about two years ago now, of a range of 200 institutions who I knew were active in the area, not all of whom are applicable, but a substantial number were. I asked them if they were using a particular medium; there were about 36 media covered. Secondly, was it used in degree courses, because for every university, that’s the measure of whether or not they are really serious. Thirdly, was it essential. The results were interesting. Print, e-mail, and Internet were the media used by most, including on degree programs. But when we asked which were essential, only print survived. The others were really optional. But I do know the position has changed in the meantime.
Quality of presentation is an absolutely critical factor, and we have a lot of evidence in that, particularly from the use of television. Other factors might include time and distance. One of a number of studies we did with the UK Open University for the EU, a couple of years ago, looked at different technologies to see what the profile of cost was. We have the cost in ECU on the vertical axis. Anything above the yellow line costs more; anything below it costs less. In the case of video conferencing, although there were another four or five technologies as well, we looked at how the cost would compare if you had to send lecturers out to a college a certain number of kilometers away, as against using video conferencing. The other dimension in this case was the use per year. As you’d expect, the cost was significantly greater per student-hour if, in fact, the college was relatively close and the usage was low. But, of course, as you increase both, video conferences became far cheaper, and it was just a matter of working out a number of break-even points.
The point is worth noting that cost is, of course, only one factor. When we say that an institution is involved in this area, what does it have to do? It has to access the infrastructure. It has to produce the courses. It has to market its programs, distribute the coursework, support the students’ learning, award credit, and administer the program. There’s quite a range of ways that institutions go about this. For example, we have virtual universities, like Barcelona, or arguably like Phoenix On-line, and there are a number of others which have emerged. We also have what I would call on-line open universities, about which I want to say something in a moment, and we have on-line extension programs. All of these are somewhat different, with different cost configurations. There is the on-line version of an on-campus lecture, the kind that’s done by Stanford or by New Jersey and Swift Technology. There is Tony Bates’ Lone Ranger and Tonto, which I must say I love. There are, of course, a number of other models which we won’t go into now.
I just want to look briefly at what’s happening in relation to on-line open universities, specifically the ones in Europe. Taking this as an example, after we’ve looked at all the generic factors about cost, how does this actually play itself out in real life? There are five of what I call traditional open universities in Europe. The credit enrollment as a percentage of enrollment of higher education is interesting. It’s quite significant; it is nearly 10% in Spain, and drops down to less than 2% in Portugal. These institutions all do a lot of things other than teach students. They provide continuing education; they’re involved in professional development; they accredit external programs, in some cases for other institutions, like UKOU; they jointly publish books and texts; they develop self-learning packs which they sell to people; they do commissioned research, consulting. So there’s quite a range of activities going on. They’re substantially funded by government, although the amount of funding varies. But it is quite substantial, I think, by United States standards.
Now, looking at open universities who are working on-line or using these technologies, they have a number of distinct advantages in this field over normal universities. First of all, they’ve a well-established reputation in distance education; the UK has something like 250 institutions where they have study centers and 13 major offices. They also have well-developed regional networks in each case; extensive course archives, which have been very well developed as learning instruments; marketing economies; and a synergy with research. There is huge pressure on most of these institutions to engage in research, and this is an ideal opportunity. They also have, as I said, substantial state funding. So there’s a lot going for them, if they want to get involved in these technologies.
However, there are a number of very significant strategic challenges. Firstly, they have very high fixed overheads, relative, for example, to the Virtual University in Barcelona. The course development systems are very slow and very costly, although they are trying to do something about that. There’s increasing competition from the campus universities; in the UK, for example, there are about 50 universities now involved in distance teaching in one way or another. As part of their mission, they have a requirement to provide for universal access, not to cream off the master students in business, for example. They have a need for high student enrollment. So the question is how to support disadvantaged students who don’t have the money to buy computers or to pay the communication charges.
Given this kind of scenario, how might the ITC’s help? How are these institutions responding to this? I’ve taken three cases, although I’ve taken the names off them to avoid libel. But in the first case there’s a very substantial investment in these technologies. One investment alone provided $15 million to a number of research institutions, so it’s very significant. Use of the technologies in teaching is very extensive, but I would argue that it is an ancillary or an add-on to what they’re already doing. On-line access is required only for part of the total program of the institution. So it isn’t a virtual university in the sense that Catalonia may be. These technologies are extensively used in other activities, for example, in promoting the institution, in providing information to the attending students, in fostering a sense of community among alumni. There’s an on-line alumni association in the system. There’s also a very, very significant research focus in the field. So that’s the first case.
The second institution is creating a digital learning environment. It’s a virtual university, which will be available on the Internet. There is a huge amount of development going on; they are very heavily involved in the development of multimedia courseware, for statistics and mathematics and so on; they have had a prototype virtual lab working for a couple of years. Technically, it is quite advanced. But the institutional factors are somewhat different in this case. Firstly, the innovations are led very much by the technical faculties in the university. It’s working within what I would call a ‘professorial culture,’ rather than the normal open university culture, if we can call it that. This virtual university system is essentially running parallel with a traditional system. And at the present, it’s serving about 10% of the students.
The third case is another open university in Europe, which is creating a new electronic learning environment, and moving away from the role of the traditional university, towards competence-based learning. The institutional factors are interesting. There’s a very strong centralized direction in the university, quite different from the professorial culture. Student numbers are declining very significantly and rapidly. The relevance of the original mission is already in doubt, because in the country in which it operates, there is a huge availability of tertiary education and a very high participation rate. They’re finding that the students they get are not so much ‘second chance’ students as ‘second go’ students, and obviously they are not too keen on funding this. 8% of the courses have 43% of the enrollment. The university has relatively static state funding, so overall its situation is rather different. What this institution is doing is re-engineering the entire institution. It’s codifying its course units to increase flexibility and use, so they will be digitized and available in a variety of formats and for a variety of student populations. There’s an on-line student network to reach a wider potential market, including a market beyond the borders of the country. It is acting as a technology catalyst for the higher education sector, for which it will now get substantial state funding, and it is collaborating with partners in order to lower the development costs and to sell its courseware. So it has a very strong market orientation, quite different from the second situation.
These three institutions are very broadly similar, have similar traditions, were all established roughly around the same time, but the strategies for use are highly diverse, quite different one from the other. The use of on-line technologies varies quite a lot. In some cases, it is little used for teaching; in another it is ancillary, optional, or add-on, a parallel or duplicate system; in other cases, it’s going to be the core. In some cases, the student population is quite unchanged; in other cases, the university is deliberately going for quite a new kind of population. In most cases, the mission is relatively unchanged, while in the third case I mentioned, there is a radical change of focus.
So that, in a sense, is how the minutiae of the economics comes out in the real world in terms off the kind of strategic direction that real universities are taking. You can see the great extent to which it is conditioned by the context and culture of the environment in which it works. In other words, it’s not an abstract economics we’re dealing with here, it’s a real life situation in the real world.
So the challenge for universities is to widen access, enhance qualities, reduce costs. Is there an acceptable trade-off between these? If so, what is it, and does it vary from one institution to another? I think it depends very often on the traditions, culture, and mission of the university, as I’ve said, but also on context and pedagogical objectives. It’s no accident that so many of these programs that are successful are aimed at post-graduate students who already have very good learning skills, and who have the money, or their companies have the money, to pay for the programs, and so on.
Another challenge is surmounting cost barriers. To illustrate some of the kind of barriers that are arising, I mention an interesting study that was carried out in Europe. I was involved in this with the Committee of Rectors in Europe, and one of the major things that came across, one of the major breaks, was what they called ‘resistance from people.’ I'd just like to make the point that what I’ve been talking about so far are institutional costs and institutional strategies, but this is really only one very small issue in the whole area. Some of the really significant questions, from an economist’s point of view, are issues like the return on investment in this field, who pays, who benefits--a huge issue. There’s a lot of transfer of cost going on with these developments. We mentioned the issue of the quality of the output. ITC very often is seen by governments as a catalyst for change; they think, ‘If we can get people working in this area, we’ll get more employment.’ I have to say that, to a large extent, it has worked in my own country, where we have had a growth rate of about 8% in the last ten years, so it’s not without its value. We have talked about questions of demand and supply factors to cost structure. What are the economies of scale and how do they vary between technologies, mixed technologies, and so on? What is it’s role in lifelong learning? The question of its social impact has been relatively neglected, I think. There is the question of the global marketplace; are we talking about a great opportunity to expand and make money in other countries, or are we talking about a real threat to our indigenous cultures? And what is the role of ICT as an agent of change, not least in the traditional universities?
I apologize for racing through that at a rate of several knots, but I wanted to tell you something general, rather than specific. And I wanted to give you some flavor for how this is playing out in relation to one very significant group of universities.
© 2006 UC Regents
Last modified: 15 April 2006 | e-mail