What he planned to do, he said, was start out slowly. He wanted to make sure he got it right, because it would be such a leap in the minds of his customers, who still associated the firm with mobiles. What he had to do was position it carefully.
A year on, and the annoyingly but memorably named TalkTalk has now attracted almost 400,000 customers, while expansion in the UK and across Europe is on the cards, with numbers set to grow even further following the latest high-profile campaign offering free calls between customers for life.
Dunstone would probably hesitate to call himself a marketer, but the way he has operated since he set up his first Carphone Warehouse, with £6000 of his own money, is marketing at its best.
His cardinal rule seems to be something that should be engraved on every marketer's brow: don't promise anything until you are sure you can deliver.
The results for the year to the end of March will no doubt reflect the success of his strategy of turning the company into a service provider rather than a product seller.
What Dunstone practices could be called hard marketing with a soft edge.
It is hard, because it is calculated down to the last detail, but uses softer tactics to get there, going by a recent piece on eCustomerServiceWorld.com about how customer love is turned into money.
According to Dunstone, he has what he calls a very childlike dream: an absolute, fervent belief that if you have to buy a mobile phone there is nowhere better and no organisation will care more about you as a customer.
His aim is for Carphone Warehouse to be seen as a next-generation, personality retailer. It's what is described inside the company as a retailer someone would cross the street to go to, even if they were standing next to a competitor.
Even more pertinent is his attitude to sales. The company never employs anyone who comes from an aggressive direct-sales background. Nobody in the company, he says, understands a closing technique. In fact, that's how he designed the company from the start: as somewhere he would go if he wanted to buy a mobile phone.
But his approach is also tough, because it is framed by a ruthless and ferocious attitude to measurement. He describes a rather cruel internal scheme based on a Hall of Fame and a Hall of Shame, where every three months a list is printed of every person in the company and the average score given to them by their customers. There aren't any rewards or punishments - just names on a list.
This attention to detail and implementation is what characterises the most marketing-focused companies. As the latest ranking of the world's most-admired companies in Fortune magazine shows, those that make it to the top (including Tesco and BP in the UK) know how to get things done.
The study found that the most-admired companies were far more likely to have translated their strategy into clear action plans with clear accountabilities.
Roles and responsibilities were well understood, with performance measures directly tied to the business strategy.
Get the balance right between hard and soft marketing. In the end, that's what makes a winner.