Upstarts: Virtual Campuses

Here's how start-up University Access partnered with universities and PBS to sell long-distance learning programs. Plus: why corporations are likely customers for virtual campuses.

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Bringing college home by TV and Internet

A company cofounded by boyhood pals enlists universities and PBS as partners in a distance-learning venture

By day, Caroline Smith, 26, works as a researcher at Glaxo Wellcome in Research Triangle Park, N.C. Last spring, to get a head start on an M.B.A. that she hoped to pursue, she paid $395 to enroll in a microeconomics course through the University of North Carolina, which is three miles from her house. She earned an A even though she entered a classroom only to take exams. That's because she received all her instruction over the Internet and from broadcasts by a local TV station.

That's an advantage, says Smith, who likes to stay home with her three weimaraners. In the comfort of her house, she has had a "virtual campus" at her fingertips. And, she adds, "I didn't have to buy a parking pass."

If off-site education is hardly new--distance learning is at least as old as the first correspondence course hawked on a matchbook cover--conveying it through a mix of television and the Internet is. That's what Smith's course does. It was produced by Los Angeles-based University Access, one of a batch of start-ups that use such things as the Internet, television, videoconferencing, and CD-ROMs to create sophisticated yet inexpensive distance-learning curricula for universities and corporations. The advances have "created a lot of business opportunities" for entrepreneurs, says Bernie Luskin, a distance-learning consultant in Los Angeles.

Smith's microeconomics course included 12 one-hour lectures by University of North Carolina professor Robert Connolly that were broadcast several times a week by WUNC, the PBS affiliate in Chapel Hill. Smith watched Connolly's lectures on Wednesday nights and then logged on to University Access's Web site for two hours. In a live interactive classroom, an instructor elaborated on the lectures, offering students a chance to ask questions and exchange ideas.

The course that Smith took is one of four that University Access has developed. All are business related, says University Access CEO Alec Hudnut, because "there aren't a lot of great business courses out there."

Hudnut, a Harvard M.B.A. and former consultant at McKinsey & Co., cofounded University Access two and a half years ago with a boyhood pal, Tom Geniesse, who had worked as a TV development executive. It was Geniesse, whose credits include developing Homicide for NBC, who came up with the idea of "marrying" television's power and the Internet's interactivity to create a "great educational tool," as he puts it.

Hudnut and Geniesse, both now 35, set out to accomplish three tasks. First, they raised most of University Access's $400,000 in seed capital from friends and family and from Hudnut's former colleagues at McKinsey. (The two have since raised more than $6.5 million in additional funds, from venture firms and individual investors.) Second, in July 1997, through what Hudnut calls "sheer force of will," they landed California State University, Hayward, as their first customer. The company now has deals with 35 colleges and universities that offer University Access courses. Third, a year ago University Access signed on a major distributor, PBS's Adult Learning Service. It offers the company's courses to its 390 affiliates nationwide, and two-thirds of those stations broadcast the programs in cooperation with a university. PBS collects a fee for each University Access course sold through the network's catalog.

While the PBS alliance carries marketing clout, University Access certainly doesn't have the field to itself. The $3-billion distance-learning market abounds with competitors, such as the fast-growing University of Phoenix and software giant Oracle of Redwood Shores, Calif., which offers information-technology training over the Net and by CD-ROM.

Moreover, the strategy of 31-employee University Access, which projects a $2-million loss in 1999 on revenues of a like amount, has yet to be proved, according to two education-services analysts. Scott Soffen of Legg Mason Wood Walker Inc., based in Baltimore, says he's skeptical that there is "enough demand out there to justify production costs," which run $1 million per course. Howard Block of NationsBanc Montgomery Securities, based in San Francisco, asks whether students will embrace a system that requires bouncing back and forth between computer and TV screens.

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