Telecom is again restricting access to a free Internet service despite a High Court injunction.

Telecom claims it had to override the interim injunction granted on Monday barring it from disconnecting i4free users because its Airedale St exchange in central Auckland was experiencing severe overloading.

But as the bitter battle between New Zealand's largest company and the new i4free over Internet access continued, i4free chief executive Annette Presley accused Telecom of blatant discrimination.

"They are trying to step outside the injunction and sabotage our business," she said.

In a court document filed yesterday, Telecom's legal firm, Chapman Tripp, said its client had a strong suspicion that the overloading was related to "the rapid expansion of the plaintiff's free Internet access service."

It said the problem could eventually affect other Telecom exchanges.

The document said traffic restrictions were being applied to all 0867-prefixed Internet phone numbers connected to the exchange to relieve the congestion.

i4free said the restrictions were harsh. Tests on Wednesday night showed that only one or two calls out of 10 made to i4free's 0867 number could get through and obtain Internet access.

It disputes, too, that other Internet providers using the Airedale St exchange are being restricted.

Another free service, freenet, which also uses the exchange, said it was not affected by the overloading.

Its chief executive, Karim Hussona, said he had heard nothing from Telecom and had not received any complaints from customers.

On Wednesday evening, it had an average of 600 simultaneous Internet users connected. i4free, which has fewer customers than freenet, claims it had only 100 simultaneous customers connected.

Mr Hussona said it was nonsense to suggest that 700 simultaneous Internet calls would affect an exchange like Airedale St, which should be able to handle at least 10,000 calls at once.

i4free lawyers Kensington Swan also gave a memorandum to the court arguing that the restriction was "an attempt to undermine the court's interim orders and thwart the launch of the new free Internet access service" which competed with Telecom's service, Xtra.

Telecommunications provider WorldxChange, which helped i4free last weekend by providing an alternative access number when Telecom disconnected i4free's numbers, has also received a warning from Telecom's lawyers.

The letter told WorldxChange that all 0867 lines at the Airedale St exchange "will experience traffic restrictions via the Intelligent Network features of the 0867 service."

WorldxChange chief operations officer Paul Clarkin said he was surprised to find lawyers, rather than Telecom operations staff, notifying him of faults.

He said that at 5 pm on Wednesday - when i4free's service was being blocked - he rang the Telecom Network Events Centre to ask if Airedale St had any congestion problems.

"I was told there were no problems with the network and no congestion at all."