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At The End Of One's Tether

Many carriers, most notably AT&T, but also others such as Optus, are getting a lot of bad press for charging their subscribers extra for “tethering” their iPhones to their laptops.

This does seem to be blatant gouging on their part, given that bytes are bytes, and regardless of whether they are destined for a phone or a tethered laptop, the cost is the same. This criticism is warranted in my opinion.

Carriers may claim that tethered laptops inevitably draw more traffic from individual subscribers. But I would suggest that the incremental traffic from a tethered laptop is a lot lower for the iPhone than for other 3G phones. Let’s face it, the iPhone is a pretty capable standalone device, and you’ll rarely need to break out the laptop to get online. Other phones are far inferior at browsing the net directly, and so I’d expect that there is a correspondingly larger proportion of traffic from tethered laptops of subscribers with these phones. This makes the additional pricing seem even more unfair.

But not all of the hate should be directed towards the carriers.

I am yet to see an answer to this question: how do the carriers know which traffic originates from the iPhone itself and which from a tethered laptop? I don’t know the answer definitively but I the iPhone must mark the tethered traffic somehow. I’m guessing that it must pass through the PPP session from the laptop, instead of terminating it in the phone and NATting the traffic.

Regardless, it is Apple that deserves at least some of the blame here for enabling the carriers to detect traffic in the first place. I know of no technical reason why they needed to do this; it sounds like a purely business decision. And one they didn’t need to make; surely the carriers are all Apple’s bitches at this point?

Boo, carriers who charge for tethering. Boo, Apple.

the carrier has control of turning on or off the teather feature in the phone itself. Not sure how.

Unfortunately the carriers are not all Apple's bitches, as you put it. As per the normal business negotiation, each side brings their cards to the table. Apple had the iPhone, for which it wanted moolah. The carriers had moolah, for which they wanted the iPhone and as many restrictions they could get. For each restriction they will be willing to offer more money, so if Apple want to be nice to a small group of users that want to use tethering they have to be willing to give up some revenue for that.

In creating restrictions, carriers push a larger proportion of users into buying addons to their contracts or into using the expensive bit of the tariff (international calls by banning net phone apps, etc), so driving up their Average Revenue Per User. Remember, the better the iPhone, the more Apple can squeeze out of the carrier and the more the carrier has to raise the ARPU to get their profit margin back. So Apple leverage the hype they can build to get a better deal from the carrier. And the carrier know that if you're spending $40/m on a contract, you probably won't mind another $5 for tethering.

Yes, they are all there to take your money. That's Big Business at work. The terms of the deal to prevent tethering, to quietly throttle certain apps, were all written into the contracts at the negotiating table. This was a done deal a long time ago. As time goes on, and more apps and uses are prevented, the terms of that deal will be slowly revealed, clause by clause. Apple has not just turned on its loving fans, it has already sold them. Did you expect anything else?