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Update: CallNet being wound up as creditors form queue

CallNet's business model always looked shaky and evidence mounts that the company is in serious trouble

A former darling of the free Internet access model, CallNet, has had its phone lines cut and is being sued by its former public relations agency, ZDNet can reveal.

Reports sent to ZDNet by a reader Thursday, claim CallNet's 0845 service was not accepting calls and that attempts to contact the company's head office went unanswered. A former spokesman for the company says "CallNet is being wound up by Mulberry [its former PR agency] because no assurances had been given that our bills would be paid."

Cable and Wireless has confirmed that it cut CallNet's lines Wednesday, for what it described as "very significant debts". A spokesman for C&W said there was at least one other telco looking for settlement on a similarly "large debt". Other creditors are also lining up to get their money back.

CallNet's demise may be just another symptom of a crisis most observers blame British Telecommunications (quote: BT) for, but to be fair on BT, CallNet relied on revenue streams that seemed shaky from the start.

Three weeks after it promised free access, things started to go seriously wrong. Customers jammed the CallNet registration page and phone lines which were simply not set up to cope with demand.

In an exclusive interview with ZDNet UK News, the then chief executive operations officer, Aaron Goodman-Simpson, explained away some of CallNet's teething problems, blaming everything but CallNet's preparation.

Simpson, along with other senior executives was ousted in August after an aggressive takeover by shareholders of World CallNet of Australia.

The site suffered many outages and perhaps the most consistent aspect of the service, was its unrelenting stream of complaints, many of which ended up in the ZDNet Mailroom.

CallNet officials in Australia are being contacted Thursday as phones in all UK offices have been disconnected.

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