Internet company Ihug has barred its 65,000 customers from accessing two rival free Web services, claiming that it is protecting users from a market "aberration."

"We don't believe the free Internet scenario is a viable one," said Ihug managing director Nick Wood. "It's us protecting our customer base."

Ihug blocked the i4free and freenet Websites after learning that i4free had won a temporary injunction on Monday that prevented Telecom from disconnecting i4free's 0867 access number.

Mr Wood said the free service sites contained nothing but sign-up information and i4free users were being encouraged to rely on their existing Internet service providers for e-mail.

"They're just leeching off our backs," he said.

"If these guys want to take our customers we are not going to let them use the Internet to do it."

Recent acquisitions and mergers of Internet service providers have demonstrated just how valuable a commodity Net users have become. Ihug's $120 million merger with Force in February valued Ihug's users at about $1000 each - and Mr Wood's stake in Ihug at $55 million.

Asked whether he was concerned that Ihug's move could be seen as anti-competitive, Mr Wood replied that it was a matter between Ihug and its customers.

"So far we've had bugger all feedback apart from a few people moaning on the newsgroups."

Mr Wood accused the free Internet services of trying to lure thousands of users to a service that had no future. He claimed that a big chunk of i4free's revenue came from an "arbitrage" agreement with Clear which in turn depended on an interconnection agreement with Telecom that would expire at the end of the year.

But i4free director Malcolm Dick said his company's revenue from Clear amounted to "a fraction of a cent a minute" and was "only a very small part of the picture."

Much more revenue would be generated from advertising and commissions on products sold.

Mr Dick said i4free was not proposing to take any action against Ihug but he hoped common sense would prevail. Until then Ihug users could receive sign-up information by sending an e-mail to download@i4free.co.nz.

"That will bypass Ihug's block unless they try and block e-mails from us, but that's really going to extremes."

Freenet chief executive Karim Hussona said his firm was disappointed.

"Customers are being denied access to certain parts of the Internet for purely commercial reasons.

"In the past Ihug has always been at the forefront of it all. Now they are acting like the Establishment."

Auckland Ihug user Jan Mahoney said she was irritated by Ihug's action.

"I'm pissed off that Ihug are preventing me from making a choice," she said.

Another Auckland user, who did not want to be named, said: "I am paying $40 per month to Ihug and I should be allowed to get to any site I want to.

"What is Ihug protecting us from? They are free services."