Congress is holding hearings this month on federal technology subsidies, including the education fund known as "E-Rate." Eliminating this disastrous program would go a long way towards restoring sanity in both the classroom and the marketplace.

The E-Rate policy was sold as a program that would ensure that needy schools are wired with advanced telecommunications at affordable rates. Predictably, political pressures twisted E-Rate into a $2.2 billion pork program, with few restrictions and little public oversight to impede its growth.

E-Rate now underwrites nearly all the costs for Internet access, telephone service, and internal connections for thousands of classrooms. Though some herald the program as an altruistic effort, government investigators have revealed E-Rate as little more than an easy mark for fraud by technology vendors, aided by crooked and incompetent education officials.

The rules governing E-Rate disbursements do nothing to prohibit "gold-plating," the over-procurement of goods and services beyond the needs of recipients. This loophole, along with the reluctance of federal officials to crack down on abuse, has led to rampant waste. In 2004 the FCC audited 100 E-Rate recipients and found that one third were non-compliant with government guidelines. Worse, many were suspected of serious scams such as bid rigging, false reporting, and other kickback schemes with tech vendors.

This followed on the heels of an alleged scheme by the Gambino crime family to use a Missouri-based E-Rate service provider to defraud the program out of nearly $22 million. And just this month, federal auditors have found that school officials in Southern California brazenly misspent more than $2 million in E-Rate funds to purchase personal laptop computers for faculty members.

If there ever was a need for a digital-divide subsidy, it doesn't exist anymore. Virtually all public schools now report having Internet access, a staggering figure that's greater than the percentage of Americans with basic telephone service. Though E-Rate proponents would like to claim this policy success as their own, the United States Government Accountability Office has stated there is no way for program officials to assess their own effectiveness, reflecting the underlying deficiencies of the federal fund. Considering the level of bureaucratic unwillingness and inability to rein in the subsidy, E-Rate's continued mission would be better managed by market forces.

Over the last few years, an influx of new communications technologies has fostered a dynamic consumer marketplace, lowering prices and raising quality standards through vigorous competition. Broadband over power lines has shown promise in connecting even the poorest and most rural communities to the World Wide Web at competitive rates. Voice over Internet Protocol, or VoIP, a cutting-edge telephony system that uses high-speed Internet access to connect callers, averages $20 a month. Opening up new markets and eliminating wasteful subsidies would make classrooms the showcases for the most advanced technologies on the market.

Granting education bureaucrats unfettered access to subsidies promotes graft and hurts the efforts of honest teachers and school administrators. Lawmakers must free underserved communities from public corruption and regulatory failure. To achieve those goals will require thinking outside of the box, and decisive action.

Congress should hold public officials accountable for their actions, push for pro-competitive telecom policies, and eliminate E-Rate. That will do more to lift at-risk youth into the Information Age than more billions in dubious subsidies.