This paper reports a project working to improve distance education in Bangladesh by means of a low-cost, large-scale interactive learning environment using video, mobile phones, SMS-based tools administered in a learning management system, and innovative pedagogy based on the student-centered learning model. The paper addresses the question of how to use existing mobile telephony technical infrastructure to create interactive learning environments which can reach a majority of the population, be able to include thousands of students, and be sustainable from a resource perspective. This question includes challenges relating to pedagogy and teaching methods, technical tools for learning and communication, and institutional arrangements. The paper addresses these challenges by the illustrative case of the Bangladesh Virtual Interactive Classroom testing the tools and ideas in course at Bangladesh Open University. We find that our tools are feasible and usable but also that sustainability requires meeting organizational and social challenges.