AT&T: no iPhone 3G tethering for you!
With the iPhone 3G's significantly faster data transfer rates and ability to perform voice and data functions simultaneously, potential buyers have become intoxicated with the idea of tethering the device: using it as a cellular modem for laptops …
Context & Ripple Effects
AT&T is Apple’s exclusive U.S. iPhone carrier, and it entered the iPhone 3G launch period while nearing completion of an HSPA network upgrade. AT&T also raised iPhone data-plan prices days earlier, making its control over which uses those plans permit commercially significant.
The carrier’s denial means faster iPhone connectivity and simultaneous voice-and-data capability do not translate into laptop modem access for U.S. customers. A rumored surcharge for unusually heavy data use remains unconfirmed.
First-order effects
- iPhone 3G buyers on AT&T cannot use the handset as a cellular modem for laptops, limiting the immediate benefit of the device’s faster data connection.
- AT&T retains control over whether its iPhone data plans extend to laptop traffic, despite having raised those plans’ prices.
Second-order effects
- Apple’s U.S. iPhone customers must treat AT&T’s network policy, rather than handset capability alone, as a constraint on mobile broadband use.
- AT&T’s HSPA upgrade can improve phone-based data service without committing the carrier to the heavier usage profile tethering would enable.
Third-order effects
- The episode points to a smartphone market in which exclusive carrier relationships can govern software-enabled services as well as pricing and network access.
- If carriers continue to distinguish handset use from laptop connectivity, mobile broadband value will be segmented by permitted use rather than connection speed alone.
The trend: Smartphones are becoming more capable network devices, while carriers seek to preserve control over how subscribers turn that capability into broadband access.