Carphone Warehouse’s assault on the high-speed internet market was dealt a blow today when the UK advertising watchdog banned it from repeating adverts claiming that the broadband element of its TalkTalk service is "free forever".

The claim had been at the heart of the group’s landgrab for broadband subscribers, led by chief executive Charles Dunstone and launched at a cost of £100 million in April.

More than 300,000 customers have since signed up to the deal, which was hailed by price comparison websites for transforming the broadband market in Britain. But it also drew the ire of competitors, including BT Tiscali and ntl:Telewest, and consumers, 145 of whom complained about Carphone's high-profile adverts.

The Advertising Standards Authority today said that because the broadband component was an "integral" part of the new TalkTalk deal, it could not be described as free.

Carphone will now be forced to rejig its tariff system – by offering broadband as an add-on to an existing tariff at no extra cost, it will be able to be advertise the service as free once more.

Without the "free" tag, Carphone would find itself at a severe disadvantage in a market where consumers are quickly becoming used to shrinking broadband costs.

BSkyB yesterday became the latest company to offer "free broadband" - on top of existing TV packages - as part of an aggressive £400 million internet strategy. Sky is 38 per cent owned by News Corporation, owner of Times Online.

As reported in the Sunday Times, Today’s ASA adjudication had been pre-empted by Mr Dunstone in his blog last week in which he said: "We have agreed to make some small changes to the terms and conditions to the offer, but Broadband from Talktalk was free, and still is free"

Carphone’s claimed "free broadband" came as part of its T3I (Talk3 International) line-rental and calls package that costs £20.99 a month on top of a one-off connection fee of £29.99.

However, the ASA went on to say that even if the broadband was genuinely free, Carphone would never be able to stand up its "forever" promise.

The company was also criticised for not making clear that its broadband deal was only available to customers already connected to a qualifying telephone exchange. Other customers pay an extra £10 per month.

The ASA has told the advertiser to seek advice before using the term "free" in future promotions.

John Petter, chief operating officer at BT Retail, which complained about the advert, said: "Carphone said "free forever" but this has confirmed that their offer isn’t free and isn’t forever.

"A service costing more than £250 a year, with a £29.99 connection fee, a £120.00 annual rural surcharge [for those without access to a qualifying exchange] and premium rate helpdesk simply isn’t free."

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