The problem? Well, there are actually two:

First – It’s a violation of AT&T’s terms of service and you MIGHT get into a little trouble for enabling it.

Second – It’s nothing new. There have been hacks around for years that would allow you to use your Blackberry as a Bluetooth Modem for free, versus paying the $60 to enable a Smart Phone tethering plan through AT&T. What IS unique about this situation is that tethering was a HIGHLY PUBLICIZED missing feature from the iPhone 3.0 firmware for AT&T customers, so it’s compromise has drawn much more attention as previous “work arounds” have.

So what’s AT&T and iPhone owners everywhere to do?

The only solution I see to this problem would require AT&T to do something it hasn’t done…. I think ever: Put the customer first.

We all know that the “Unlimited” data plan you buy from AT&T for your iPhone (be it EDGE or 3G) really isn’t “Unlimited” and if you were to dig into your contract or Terms of Service (TOS), you would see that AT&T decides to not use the Marriam-Webster definition of “Unlimited”, but have decided on a new definition: “5GB/month”

I understand business involves some negotiation and some give and take, so as a consumer, I’d be willing to make the following agreement with AT&T:

I will agree to allow you to LOWER the bandwidth limit on the standard “unlimited” plan to 1GB, if you agree to not charge extra for tethering support and setup a tiered pricing plan for bandwidth where 5GB/mo is $40, 10GB/mo is $60, and so on.

Now honestly, AT&T, consumers of America, did that hurt too bad? No, of course not. It’s a perfectly fine compromise.

Do I think that’s what will ACTUALLY happen? No, of course not.

What I picture happening is AT&T will probably bring the iPhone tethering plan in line with their current Smart Phone tethering plans ($60/mo), and start charging people who are currently not signed up for this plan an astronomical gateway fee for using their “WAP” gateway on a per kilobyte bases (say, $1 per kilobyte).

Which would mean this picture would end up costing you $40 on your monthly bill:

AT&T will charge you for this!

Will AT&T cancel or suspend users who are currently using the “hack” to access tethering? Of course not! Why cut a paying customer from their base and give that money to a competitor, especially when they can charge you huge penalties!

So my suggestion to anyone using tethering is to just use at your own risk and know that what your does DOES violate your Terms Of Service. This way when you get a $1,000,000 bill from AT&T because you decided to bit torrent some Norwegian Porno while driving to Fresno, you won’t be left looking like our $40 man pictured above!

Cheers!