It is rare for Charles Dunstone, the Carphone Warehouse founder, to take a wrong step.

But his bold decision to launch “free” broadband in April 2006 was nowhere near as well executed as it might have been, and the sharp slowdown in uptake of new customers today — from 126,000 last quarter to 89,000 in the second quarter — is a sure sign that he is paying the price.

Mr Dunstone triggered a price war for “always-on” internet access by marketing a service that was free to customers signing up for a £20.99 calls package.

But he was ill-prepared for the huge demand and what followed in terms of customer complaints was a public relations disaster for the brand, which is the country’s third-biggest broadband provider.

Potential new customers have plenty of choice of providers aside from Carphone: BSkyB is forging ahead and BT is also performing well, taking a 38 per cent share of broadband net additions in the last quarter.

Another big rival, Telefónica’s O2, joined the market last week.

It is expected to do some damage to the existing players.

Meanwhile, the first wave of customers, who signed up for TalkTalk with the requisite 18-month contracts when the product launched, will be considering whether they want to stay with the company.

Any potential losses will become apparent only in the months ahead.

More negative surprises could be in store.