Online Education in Australia Full of Potential

Although the first non-military use of the Internet was by universities, the online education market has only recently begun to gather pace in Australia.

In the US Larry Ellison, Paul Allen and Michael Milken are all backing Net education plays. Both are investors in Knowledge University, an online education provider, and UNext, a provider of business education courses designed by elite schools for corporations.

The potential market is significant. There are approximately 80 million students enrolled in higher education programs worldwide in 1999, and of these 6,150,000 are online, according UNESCO. In Australia there are 690,000 enrolled in higher education courses.

A key segment for online education players is the distance learning market. In 1998-1999, the total value of Australias education exports was AUD $3.182 billion (US$2 billion). Of the estimated 85,900 international students, 70 percent are on campus in Australia, 7 percent are off campus by distance education, and 23 percent are studying at offshore campuses, according to IDP. Online delivery of Australian course work could potentially accelerate local penetration of international markets.

According to Hong Kong-based online education start-up NextEd Ltd the market for online and distance education services in Asia is already worth US $4 billion and growing at 25 percent per year.

The US experience is instructive for local start-ups. According to IDC, 710,000 US students were enrolled in distance learning last year. By 2002, that number will reach 2.2 million, with strong growth coming from online courses. IDC thinks 90 percent of the online learning market is untapped. Further, according to the Campus Computing Project, 30 percent of US colleges and universities plan to incorporate the Internet into their distance learning initiatives.

In Australia, the University of Southern Queensland claims that of its 20,000 students, 75 percent are studying through distance education that involves some form of electronic delivery. Demand for post-secondary education is likely to intensify locally and overseas, as a larger percentage of high school graduates apply and due to a generational population boom. UNESCO estimates that post secondary enrollment have risen 295 percent worldwide since 1985.

The business models of online education players are comprised initially from course conversion fees paid by universities, hosting of courses on delivery platform and server network, followed by a percentage of subject revenue paid by students dependent upon level of value added. New business streams are likely to include non-accredited course revenue, tutorial support and enrollment services.

Another key market for industry participants is corporate training. Last year, corporations spent US $100 million on Internet-based training. By 2002, IDC expects corporate spending on online training to reach US$6 billion. Overall, US companies spent US $60 billion to train employees in 1997.

In Australia, NextEd Ltd is targeting a worldwide market for online education through an end-to-end solution that includes course conversion, project management, marketing, distribution, e-commerce and student support. NextEd has agreements with Stanford University, the University of Southern Queensland, the Australian Catholic University and La Trobe University to convert and deliver specific courses online.

For the K-12 market, another active local player is Schoolsnet which currently provides Internet services to over one and a half million Australian school children and 4,000 schools.

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