If an institution sets up PLEs for students using something like Elgg is that really that much better than an LMS? The students are still at the whim of whatever the institution chose to use.
An institution cannot set up a PLN (what is being referred to here as a PLE) for students because, well, it's only personal if the students have a say in its design. An institution can set up an LMS (i.e., an infrastructure) but that's just a tool. Whether one calls it an LMS or Elgg, it really depends on how the tool is being used. The functionality between Moodle and Elgg might be different, but when looking at one's possible PLN, an LMS typically is only a small part of the whole. The university might be able to control the LMS, but they can do little to restrict the learner's PLN (even with the capability of blocking a few sites).
The long tail (i.e., students) will continue to rise if teachers, administrators, etc. support learners in pursuing a PLN that is truly personal.