AT&T forces iPhone owners to choose: unlimited data or tethering

And customers gripe that $20 tethering fee comes minus data allowance

iPhone owners who want to use tethering must give up their unlimited data plan, AT&T confirmed today.

The new feature, which turns the iPhone into a mobile hotspot that a laptop or other device can use to connect to the Internet, will be available when Apple ships iPhone OS 4, its mobile operating system upgrade.

Apple is expected to unveil details of iPhone OS 4 -- including its release date -- on Monday when CEO Steve Jobs delivers the opening address at the company's Worldwide Developers Conference (WWDC) in San Francisco.

Most analysts expect that Jobs will also take off the wraps from the next-generation iPhone, which could go on sale as early as June 18.

The iPhone OS 4 upgrade will be available for iPhone 3G and iPhone 3GS smartphones, the models Apple introduced in 2008 and 2009, respectively. However, some features in the new operating system will not be available on the iPhone 3G; Apple has not spelled out what will and will not run on the 2008 iPhone.

AT&T will charge $20 per month for iPhone tethering, but unlike the tethering plan it now offers other smartphone owners -- that plan gets the boot on June 7 -- it comes with no additional data usage allowance. The almost-obsolete tethering plan includes 5GB of monthly data usage.

But AT&T requires that iPhone customers drop their current $30 unlimited data plan and instead sign up for the $25 DataPro capped-data plan if they want tethering. DataPro provides 2GB of data usage monthly. AT&T has promised that current iPhone owners who pay $30 for unlimited data can retain that plan indefinitely, even if they extend their contract with the carrier or purchase a new replacement iPhone.

In other words, customers must choose between unlimited data or tethering.

Although 2GB may be more than sufficient for most iPhone users, tethering will consume more data because of the larger screen of the most likely tethered device -- a laptop.

Some current AT&T customers noted that, and complained about the $20 additional for tethering.

"With normal websites and tethering I would use 2GB in about 4-5 days," said someone identified only as "overdramatic" in a message posted Wednesday on the AT&T support forum. "I was measuring my usage today and in a 4-hour block I used 500MB."

"Now we have a very structured pay-as-you-use-it data plan. OK, I'm fine with that," said "daica5" today on the same thread. "I don't mind paying $10/GB [for overage]. That's a reasonable cost. But when you're charging per GB instead of a giant bucket, the $20 (for nothing) tethering fee is unreasonable. You use 10 gallons, you pay for 10 gallons. You don't pay more for the same 10 gallons because it's going in to a Hummer."

iPhones cannot be tethered to an Apple iPad, AT&T has also confirmed. Earlier this week, a spokeswoman for the mobile carrier directed questions about iPhone-to-iPad tethering to Apple, which has not replied to requests for additional information.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is

Copyright © 2010 IDG Communications, Inc.

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