The collapse of small Auckland internet provider Meridian Internet has left creditors owed thousands of dollars and customers without web sites or e-mail addresses.
Meridian's managing director, Dale McIsaac, said the company ceased trading because of Telecom's 0867 strategy to force all internet users to go on to itsnetwork or pay a per minute charge.
"We believe we can no longer continue with the level of service our customers expect and maintain our revenue levels," Mr McIsaac said.
Ken Baguley, managing director of internet commerce firm OBM, which sublet offices to Meridian, said McIsaac left owing a month's rent.
"A couple of Tuesdays ago we came in and found they had done a runner," Mr Baguley said.
"Their 0900 number was running hot with clients who had lost their connections to the world."
Mr Baguley said OBM took over hosting a couple of the web sites, but referred residential customers elsewhere.
He said speculation in some quarters Meridian could have 5000 customers was overstated by a factor of at least 10.
"It appears quite a number of customers had prepaid for six months internet access, and there were other people who it seems were getting free access - they don't seem to have been good about sending out invoices."
He said Mr McIsaac had always talked as if he was going to take over the world.
"It was pretty fantastic to start with but somewhere along the way they didn't get their sums right."
Richard Mills, the managing director of Dove Electronics, said he went to the offices several months ago after Meridian failed to pay for $4000 of modems, but there was never anyone around.
"We passed the word around the industry, and most people whacked them on to cash accounts," he said.
Mr Betts said yesterday the company had been trading for three years, and denied it had "done a runner".
"We had a meeting with our lawyer that day and resolved to cease trading," Mr Betts said.
"When a company ceases trading, there are always a few loose ends."
He said because Meridian was on the Telstra network, Telecom's 0867 plans caused problems for its customers.
He said former customers had rung to express disappointment at the closure and say how happy they had been with the service.
He was not able to comment on the claims of Dove or other creditors.
