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AT&T (NYSE: T) will soon provide an official data tethering solution for iPhone users, the carrier has confirmed. Such a solution will basically let an iPhone owner turn the handset into a modem and then connect to a Mac or PC, allowing the computer to access the Internet via the iPhone's AT&T cellular data service.
"We're working with Apple (Nasdaq: AAPL) on a tethering option for iPhone and we hope to offer it soon," Wes Warnock, a spokesperson for AT&T Mobility, told MacNewsWorld. "Can't provide any details beyond that," he added.
AT&T Mobility President and CEO Ralph De La Vega first mentioned the tethering solution in an interview with TechCrunch's Michael Arrington at the Web 2.0 Summit, though he did not elaborate.
The Past and the Future
Owners of jailbroken iPhones have long been able to tether their iPhones to notebooks and the like, but the moderate hacking required tends to run afoul of official carrier agreements and support. AT&T, for example, currently prohibits tethering as part of its iPhone services.
This summer, the iTunes App Store offered one application called "NetShare" by NullRiver was temporarily offered in a on-again, off-again romance with fast-acting App Store watchers. Apple put it up for sale, then took it down, posted it again, and then again removed it. While NetShare used built-in WiFi capabilities to create a tether to the Internet, it was a cumbersome solution at best -- and it appears to have been prohibited by AT&T's user agreement.
'Dumb-Proof'
In August, gadget blog Gizmodo reported an e-mail 
exchange between a reader and Apple CEO Steve Jobs in which the reader complained that not having a tethering option for the iPhone made little sense -- particularly since AT&T offered a tethering solution for BlackBerry for US$30 per month.
Jobs apparently agreed and noted that Apple was working on a solution.
Actually, AT&T currently supports more than three dozen phones for tethering. Still, tethering remains a solution that's geared only for savvy mobile users.
"From the standpoint of tethering, it's obviously, 'Those people who are technically capable ... do.' I have a Nokia (NYSE: NOK) N95, which is a 3G phone. I can tether using Bluetooth or tether with a cable, but it's not for the faint of heart -- it's not for your usual user," William Ho, research director of wireless services for Current Analysis, told MacNewsWorld.
"So for a slice of the 3G iPhone users, they have to be pretty astute -- unless Apple comes out with some utility that makes it dumb-proof," he added.
The Dollars and Sense
In addition to the complexity, there's at least two other possible reasons the iPhone hasn't had a tethering option since Day 1. The first is that AT&T may have been concerned that its networks would not have been able to handle a rapid influx of Internet data use. The flood of customers that scooped up new iPhone 3Gs when the devices first went on sale taxed the network enough. Adding to the mix laptops using iPhones as modems may have been too much to handle at once.
The second is that AT&T has a more expensive LaptopConnect service offering, which is focused on laptop mobility for professionals. It works with a dedicated card or USB stick.
"To some extent, it cannibalizes the AirCard stuff, for which they get $60 a month," Ho explained. The existing mandatory $30 data plan for the iPhone, plus another $30 for a tethering solution, would come to $60 per month for a dedicated laptop mobility Internet service charge, he said.
"From the carriers' perspective, they want to make themselves whole" by offering complete services without hurting existing revenue streams, he continued.
In the Enterprise
From the perspective of an IT manager in the enterprise, the potential cost savings may not be particularly attractive. If mobile professionals increase their support calls with a tethering option, a dedicated laptop connection solution would remain the smarter way to go.
"Don't forget, the Bold is the first 3G BlackBerry out there, so even if you tethered, it was on EDGE," Ho said.
Plus, "With tethering, it's not like you're going to get almost equivalent utility from an AirCard, because the newer AirCards are HSPA (High-Speed Packet Access) AirCards, and in the CDMA (Code Division Multiple Access) world, they are mostly EVDO (Evolution-Data Optimized) Rev A AirCards, and the difference is you get better latency characteristics and a better uplink. So HSPA gives you a higher uplink vs the iPhone, which is just HSDPA (High-Speed Downlink Packet Access)," he explained.
Regardless of the speed, blog chatter and the brouhaha over the NullRiver reversals has previously shown there is demand from savvy iPhone owners who aren't already on a dedicated laptop connection plan.
If such a solution doesn't come before the end of 2008, there's a good chance that it would come early next year. Apple CEO Steve Jobs will most certainly appear on stage at the Macworld conference in January, an annual presentation at which he customarily introduces new products.
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