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Will Apple and AT&T allow iPad tethering? (updated)

The latest developer release of iPhone OS 4 includes a setting for Internet tethering. While almost a year late, the feature isn't yet released and begs the question: will Apple and AT&T allow you to tether your iPad to your iPhone?

http://cache.gawkerassets.com/assets/images/4/2010/05/500x_tethering_01.jpgGizmodo reports that iPhone OS 4 beta 4, released to developers yesterday, includes an option for Internet tethering.

The setting is now clearly visible in Settings > General > Network as a button labeled "Set Up Internet Tethering" (pictured). The descriptive text underneath reads:

Internet Tethering allows you to share your iPhone's Internet connection with your computer via Bluetooth or USB.

If tethering is actually released next month, AT&T would finally be delivering on its promise almost a year late. Tethering was promised at the end of summer 2009 then at the end of 2009, so excuse me if I sound pessimistic.

The real question is how Apple and AT&T will implement iPhone tethering. It's obvious that AT&T will charge for the service and one need look no further than the data plans available for the iPad 3G for a hint of what's to come. Two 3G data options are available for the iPad:

  • 250MB of data - $15 per month
  • Unlimited data - $30 per month

Both require a one-month minimum but no extended contract beyond that. It would stand to reason that AT&T will offer similar plans to iPhone owners.

My question is whether Apple will allow the iPad to tether to the iPhone. Sure, it sounds like a no-brainer, but then again this is AT&T we're talking about here. If Apple doesn't, I'd imagine that customers would revolt. After all, isn't the iPad just a computer? How could Apple/AT&T allow tethering to a MacBook but not to an iPad?

Conspiracy theorists would say that Apple wants to sell more 3G iPads (which carry a $130 premium over the Wi-Fi model) and that AT&T would rather you purchase another data contract. But if you're already paying or an iPhone data plan and tethering for your notebook computer, no one would purchase a third data plan for their iPad? Would they?

Again, I don't think that Apple/AT&T have any choice but to include the iPad in its tethering plans, but truth is often stranger than fiction.

The best tethering option -- hands down -- isn't tethering at all. The Palm Pre+ offers a mobile hotspot app that allows up to five devices to share its 3G Internet connection - for free. That's $60 less per month than a MiFi and (an estimated) $30 less than AT&T's tethering plan.

Photo: Gizmodo

Update: Gizmodo notes the other new features since beta 3: a utilities folder, new wallpapers, the ability to turn off group messages and viewing photos in landscape mode.