The Internet Users Society-Niue says it will close down the WiFi technology if the island government insists on a fee paying license to operate the service.
A spokesperson said the wireless service is free to all and all equipment was bought and installed by the society.
The Society says its not willing to bear any further additional costs.
It is accusing the head of Niue Telecom, Richard Hipa, of acting arbitrarily in cutting off the line linking the internet cafe in Alofi with the server situated two kilometres away.
The Society says if the government wanted to shut the service down it should have used the legal process.