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!

What are they not telling you? That the 40GB plan is $54.90! The comparable in price plan they’re offering to customers who currently subscribe to Road Runner standard for $29.95/mo? A paltry 5GB! That’s right! Time Warner Cable is going to be charging home users almost THIRTY DOLLARS per month for a pathetically small 5GB of data transfer. Don’t think the marketing genius stops there! In addition to these new ridiculous bandwidth caps, they’re going to be charging you $1 per gigabyte over!

To break down these numbers, I thought I’d throw out some AVERAGE usage from my household, who DOESN’T use P2P file sharing or sites such as The Pirate Bay:

Average Amazon Unbox video rental file size: 1GB

Average weekly Rock Band DLC file size from XBox Live: 150MB (500MB if it’s a full album)

Average Netflix Streaming (High Quality) video: 2GB

So by looking at these numbers, just downloading the OCCASIONAL Rock Band downloadable content and watching a movie every OTHER Saturday Night would cause you to incur bandwidth overages if you’re using the standard $29.99/mo plan from Road Runner.

Is this a mistake? You’re damned right it is! Time Warner has obviously missed the boat that the internet is the future and by limiting people’s access to it, it’ll only drive customers away to other services that make online content more readily available (and cheaper!). So let’s discuss alternatives!

Alternative #1: DSL (“I just want regular Internet Access”)

"The Man"

Personally, I’m not a super huge fan of DSL because speeds vary depending on your distance from the telco and their bandwidth compared to the offerings from cable companies can’t complete. BUT, desperate times call for desperate measures!

AT&T offers a high speed DSL plan for $35/mo that has speeds of 6mbps downstream & 1mbps upstream. Comparable to Road Runner in price, AT&T offers a DSL plan for $25/mo that features 1.5mbps downstream & 384kbps upstream.

I agree that these numbers SEEM weak, but let’s crunch the numbers really quickly. What I want to do is compare maximum monthly cost assuming you leave your internet connection ONLY downloading 24 hours a day for 30 days (one billing cycle).

As you can see, if you’re only concerned with monthly transfer it would seem that AT&T DSL is the best alternative to your bandwidth requirements. If you need speeds higher than 6mbps, then it would appear you’re tired to Time Warner’s draconian bandwidth caps.

Alternative #2: Dedicated DS-3 (“I want speed, no matter the cost!”)

My doctor said I need more..

This sounds ridiculous, but hear me out. I’m sure nobody out there will debate that a dedicated DS-3 is a viable alternative to residential internet providers, but the numbers add up versus Time Warner Road runner because it’d be much cheaper per gigabyte and over twice the speed!

There are many DS-3 providers across the country and each one has different pricing structures. I took the average of a cross section of quotes it would cost me to have a DS-3 installed at my home in a coastal California city. I’ll break down the price using the same table above:

So as you can see from the above table, as ridiculous as a dedicated DS-3 line sounds as being used for residential internet access, it comes out being cheaper than Time Warner Road Runner! Food for thought for those people who have nothing but money to spare and demand top speed access and unlimited monthly transfers to their favorite… recipe sites.

Alternative #3: Dialup (“I want more monthly transfer, I don’t even care about the speed!”)

+++ATAH0

Wait, wait. Don’t close your browser yet. Just hear me out on this one

Dial up is something a lot of us remember fondly as our first gateway to the net. Internet providers did limit our usage, but it was time limited (for example: 30 hours per month). Not because bandwidth was more expensive then (which it was), but because telco fees were so high when it came to installing additional POTS line to the ISP. This way they could operate on fewer POTS lines without having to charge users higher monthly rates.

Dialup modem technology has plateaued at 56kbps over your standard phone line (depending on distance to the telco, same as DSL). The average dial up plan these days is roughly $9.99 and can be found in almost any market. It’s a fantastic alternative because it can work virtually anywhere without much additional hardware, effort on the end user…. or trenching fiber down the street

How does this even make sense as an alternative? Total monthly transfer! That’s right folks! Did you ever stop and wonder “Wait, 40GB per month? How much is that in kilobits per second?” The sad and shocking answer to that is about 16.5kbps. You heard me! The best Road Runner plan you can buy offers you less monthly downloaded data than a 28.8 modem!

So now that I’ve got your attention, hows about that great service comparison table again!

Have I sold you on dial up? Probably not But I’m trying to make the point that Time Warner has gone completely off the deep end with their pricing structure compared to the services that you receive. Am I the only person who’s floored that dial up is not only cheaper than Cable Internet but now also offers better monthly transfer at a lower rate?

Is Road Runner bandwidth REALLY $100 more expensive than dial up? No, if anything, bandwidth has become many times cheaper than it was ten years ago. So what gives?

Well, my personal opinion is that the bottom line here is the cable industry is in trouble from competition who have more focused and more easily maintained infrastructure. Competition in the Television market from companies like DirecTV and DishNetwork have forced some cable companies into bankruptcy because upgrading and maintaining a physical network has overhead much higher than that of a single satellite floating through space.

In addition, you have internet competition from companies like AT&T and Verizon who are starting to offer Fiber To The Premises (FTTP) in newer housing communities, which bundles internet, television and phone all under one low cost bill.

I hope everyone takes these points to heart and contacts Time Warner and asks them “What gives?” And if it comes down to it, look into one of the alternatives I proposed above because that’s our rights as consumers!

Cheers!

PS: If you get the DS-3, invite me over to your house. I have some stuff I need to download