This report provides administrators, school boards, and policymakers with data to help them in the decision making process related to distance education systems. A literature review covers theories of distance education, distance education today, the economics of distance education, distance education and technology, transmission systems, and distance education classrooms. Results of a cost analysis that utilized face-to-face, telephone, and written interviews to identify costs required to design, build, and install a distance education system are presented. Costs are summarized and categorized in two sections: the first section deals with the costs of fiber, microwave, and compressed video systems; the second section deals with the interactive distance education classroom costs. Supplemental materials include: (1) flow charts of the three types of systems; (2) a table of cost comparisons; (3) a description of the Iowa Communication Network; (4) a directory of interview sources; (5) an outline of considerations for setting up a distance education system; (6) tables of detailed cost estimates for each type of system; (7) sample microwave path studies and profiles; (8) classroom designs and equipment lists; and (9) Iowa Narrowcast Advisory Committee Classroom Equipment Specifications. (Contains 114 references.) (ALF)