Chello to cease service on Feb 1

Chello is about to bail out of the local ISP market, leaving the job of delivering broadband service through Telstra Saturn's network to Paradise.Net

Chello is about to bail out of the local ISP market.

Subscribers of the service Chello delivers through the Telstra Saturn network received an email on Friday saying the company had "regretfully informed" Telstra Saturn that it would discontinue service in the New Zealand market from February 1.

Telstra Saturn is offering 512kbit/s and 128kit/s products from Paradise.Net, the Telstra-owned ISP that also offers service through its network. Neither of these are flat-rate as Chello's service was, but monthly limits range up to 10Gb for a 128Kbit/s service.

Although the Dutch-based Chello was once named "broadband ISP of the year" in Europe, it never appeared to settle into the relatively demanding market here, and its flat-rate service performed poorly for some time after launch, apparently because it had failed to secure enough international capacity.

The company was also embarrassed late last year when it advertised price cuts for its service – and offered further details to customers – and then said the offer was an error. Shortly afterwards Telstra Saturn CEO Jack Matthews made it plain he was not impressed with Chello's performance.

Chello's reasons for being in the local market may also have been dented by the failure in December of its merger with US company Excite@Home, which had originally been billed as a move to create the largest broadband company outside North America.

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