iPhone OS 3.0 introduced a long awaited feature on the iPhonw world, namely the ability to use your device as an external modem. In the mobile phone world this is already history, but for some reason Apple delayed this feature for almost a year after the launch. I suspect this is having something to do with the US agreements with AT&T but that would be only a speculation from my part, based on a hunch and nothing more. Whatever the reasons for blocking this feature, we’re not concerned with them anymore, the iPhone OS 3.0 is here and is giving this feature.
First of all, this feature is highly dependent on your mobile network operator, because the activation is done at the SIM level. In Romania, where iPhone was brought by mobile operator Orange, I had to activate this option by calling customer service. Activating this option will add an extra 4 EUR / month to my bill, apart from what I am using by navigating. I don’t know if it’s expensive or not, but it surely is convenient.
Once the option activated, you go to your iPhone and navigate to Settings -> General -> Network where you will find a new setting entry: Internet Tethering. All you have to do is to turn it on:

If you didn’t activated the service with your mobile operator and still try to activate that option you will receive an alert telling you to contact your operator prior to activating the service in the iPhone.
Bluetooth Or USB Connection?
Once you activated your service with your mobile operator AND inside your iPhone, you will have 2 connection option: Bluetooth and USB cable. I always keep my iPhone connected to my MacBook Pro – for charging, if no for testing some new app or piece of code – so this my preferred option. I used with Bluetooth also and it works but Bluetooth tends to have this nasty behavior of draining our your battery sooner than you expect. By keeping the iPhone connected via USB you can test some app browse the Internet. From what I saw, you cannot CHARGE your iPhone while in tethering mode. Let’s hope it can be fixed by the next OS or firmware version.
Once the iPhone connected the magic happens: a new Ethernet interface is automatically added to my network profiles and I am ready to use it. If I have more than one Ethernet connection active I can stop my iPhone Ethernet connection and use what I already have. I find this extremely convenient. No more complicated modem settings, access phone numbers to remember and so on, just a simple Ethernet interface which you can activate via your Network sections in Settings on your Mac. Didn’t use this feature on Windows (in fact I didn’t use an iPhone with Windows so far), but I suspect it would be somehow similar.
iPhone Tethering Speed
Orange has 2 speed options when it comes to 3G: 3G and what they call 3G+ (I will not cover EDGE because I find it extremely slow and I use it only when I really have no 3G coverage). For 3G you get 3,6 Mbps and for 3G+ you get 7,3 Mbps. In practice you will never get that, of course, but I was able to have a comfortable Internet experience using Orange. Where I live there is no wire coverage (no ADSL, cable or optic fiber) so the only option is mobile Internet. I’ve been using Orange 3G services for almost a year now and I must confess I’m pretty satisfied: I can’t always watch YouTube, but I’m comfortable with email, browsing and other small desktop clients like TweetDeck.
On the iPhone, however, I don’t get more than 3,6 Mbps because there is no 3G+ option on the iPhone. Typically, this translates in ping responses between 90ms and 140ms which is still ok.
Here’s how the iPhone looks where it’s connected and connecting my MacBook Pro to the internet:

And here’s how it looks when I chose to do something on the iPhone, like checking email or browsing with Mobile Safari.

Note that you can still access internet while you’re tethering which I find pretty cool.
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