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iPhone Tethering Comes at a Cost to Everyone

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The long-awaited feature will finally arrive, but AT&T unveils tiered data plans to get it.

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Despite complaints from sociologists and overbearing mothers, the fact that people have steered away from verbal communication does have its upside. Fewer impromptu or interminable phone calls, correspondence can be edited and prepared before it's sent, and conversations now tend to stick to the point. But most welcome to consumers is the gradual phasing out of high-priced voice plans. With email and text available on nearly every feature phone -- and the wide variety of social networking options on every smartphone -- parsing out an allotment of minutes and the subsequent worries about going over has been replaced with very handy, often reasonable, unlimited data plans.

A flat fee and limitless information took the worry and hassle out of communicating with those around the world. No wonder mobile carriers want to put a stop to it.

Last week, Verizon Wireless (VZ) CEO Lowell McAdam mentioned his aim to ditch the unlimited data option for customers when the company eventually rolls out its 4G network. In its place, McAdam believes tiered data -- or paying for data in chunks -- will be an inevitable future.

And McAdam might be right.

To the delight of a highly frustrated user base, AT&T (T) announced today in a press release that it will finally be enabling the tethering feature for the iPhone (AAPL). For users who have watched in horror as Google's (GOOG) Nexus Ones, Motorola (MOT) Droids, and international iPhones readily connect to laptops for mobile Web access, this comes as a long overdue blessing.

But, of course, there's a catch. The press release also details AT&T will be removing its unlimited data plans as an option -- just in time for iPhone tethering!

It's no surprise that the sluggish and oft-criticized AT&T network needed to free up some bandwidth for the influx of iPhone and iPad customers surfing its subpar 3G network. And the question of whether the iPad 3G could be readily supported on AT&T has been answered to not one raised eyebrow. It can't.

So now, along with the iPhone, Sony Ericsson (SNE) (ERIC), and other AT&T smartphones, the iPad 3G -- marketed as a revolutionary tablet computer with limitless possibilities -- will force its owners to restrict their use lest they go beyond their data cap and pay a penalty. And it's because of its addition to the network, as well as the abysmal coverage AT&T has given iPhone users in metro areas, that all AT&T users will be punished soon enough.

The company claims that current customers aren't required to switch from their $30 unlimited plans, but if they do, there's no return. And analysts like Brennon Slattery at PC World are pessimistic about how long existing customers will be allowed to keep their unlimited data plans.

The new system is laid out as such:

DataPlus will give you 200MB of data for $15 per month. Claiming 200MB is enough to adequately cover the email, video, and file transfers for 65% of its users, AT&T will charge another $15 for another 200MB if you go over the limit. To repeat, a 100% penalty for exceeding the data used by downloading an album and streaming a few TV shows on YouTube.

DataPro will give you 2GB of data for $25 per month. Although clearly the better deal, it's also required on top of an extra $20 per month AT&T charges for the privilege of iPhone tethering. Exceeding 2GB cost $10 for each additional GB and, oh yeah, the data transferred during tethering counts against the original 2GB. AT&T asserts that only 2% of its mobile customers ever exceed 2GB in a month.

Let's see how that fraction rises when laptops are connected to iPhones.

As file sizes continue to grow, as data transfers continue to increase, and as mobile carriers and media companies like Comcast (CMCSA) and Time Warner (TWX) continue to wage war on limitless information with data caps, every megabyte users access becomes monetized and, in turn, scrutinized. "Should I read that article or watch that clip of my nephew that my brother sent me? I might be close to my limit."

In 2010, there's no reason users should feel threatened or be penalized by the amount of information they access. Not for money lost in voice plans. Not for a shift to free online video. And especially not for a lousy network infrastructure.

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