AT&T aggressively moving against unauthorized tethering

AT&T is ruining a lot of people's days with a customer mailshot explaining that its "records show that you use [tethering] but are not subscribed to our tethering plan." iOS, of course, will disable the built-in tethering facility if you do not have an appropriate carrier plan.

There are a few jailbreak apps, the most popular of which is MyWi (previous TUAW coverage), that bypass the plan check and enable tethering independently. When you run MyWi or similar apps, your iPhone creates a wireless hotspot that allows you to connect other devices without the explicit permission of your carrier. Until now, people have assumed that AT&T either doesn't care or cannot determine that the traffic comes from a connected device rather than the iPhone itself. Clearly, those assumptions are incorrect.

OSXDaily.com has the full text of the letter. It goes on to state that users can either terminate their unauthorized tethering usage before March 27, or they will be automatically moved to AT&T's DataPro plan. DataPro includes tethering and doubles the data cap from 2 GB to 4 GB, but also costs an extra $20 per month compared to the normal smartphone data plan. Any customers on the grandfathered unlimited data plans from older iPhone plans would also lose that facility if they moved to DataPro. (Update: reworded this paragraph for clarity based on feedback from @GlennF and @Chartier; thanks guys!)

This is unlikely to be a popular change (he says, with British understatement). Many users contend that if they have a plan that allows for (say) 1 GB of wireless data, then it shouldn't matter if that data is used by the iPhone or by a connected laptop. Other users who were sold an unlimited data plan say that unlimited should mean just that; no limits. AT&T's position is simple however: customers using MyWi (and its ilk) are in breach of the letter of their contracts, which expressly forbid this kind of tethering.

When AT&T sells a smartphone user a data allocation, it is gambling that many users will never come close to the cap. Depending on what you choose to believe, this roll of the bandwidth dice is either used to make more money or to reduce pricing across the board for all customers -- without intimate access to AT&Ts accounting processes, it's impossible to know for sure which interpretation is more correct. The structure is analogous to how an airline will overbook a flight while forecasting that, on average, there'll be a couple of no-shows or last-minute rescheduled trips, so everything will work out without anyone getting bumped.

Tethering often tips the odds of the game so the house always loses. By making high-bandwidth applications, such as streaming or even peer-to-peer downloading (like BitTorrent), more accessible to users on tethering plans, bandwidth utilization moves toward the high end. Whilst there's a general feeling amongst many users that this is nothing but naked profiteering, that's not necessarily the case. I worked for a Sprint contractor on the sidelines of the initial rollout of Clearwire in 2008, and I can personally attest that managing backhaul capacity (the internet links that carry traffic from cell base stations) is complex, challenging and very expensive.

AT&T cellular isn't alone in finding it difficult to manage the ever-growing bandwidth demands of its customers. The cable internet part of the business is imposing caps on the U-Verse service, and the much publicized unlimited data offer that Verizon offered with its iPhone plans has been confirmed to be a limited time deal. Meanwhile, here in the UK, most of our providers of both cellular and fixed-line broadband have long ago moved either to hard caps or to bandwidth throttling in an effort to control runaway costs. There was similar uproar here at the time, but in the end, very few customers ended up on the wrong side of the caps.

Nevertheless, it's a fact that the money you cost AT&T as a data-using customer scales only with the amount of data you use. Tethering has no direct bearing on it. I'm sympathetic to those who argue that if you've bought a bucket of 1 GB of data, then it shouldn't matter how you use that data. Hopefully, in time carriers will drop tethering charges altogether -- one UK operator, Three, has already done so.

One final footnote: how does AT&T know? The company isn't telling, of course, because that would immediately set people off figuring out ways around it. This reddit thread (note, NSFW language) has some good technical speculation on what might be going on. My personal guess would be something quite simple, such as checking the ID string that all web browsers send as part of a request. If a given account doesn't have tethering, but it has lots of browsing activity from, say, Firefox or the OS X version of Safari, it's pretty much guaranteed they are using something like MyWi.

This simple check could easily be bypassed by using a VPN on the tethered device, stopping AT&T from seeing inside the traffic, but I'd imagine AT&T isn't interested in catching every last person doing this. It'd be sufficient to catch enough people to generate a PR hullabaloo. The fear of punitive charges would effectively discourage everyone else.

Update: commenter "naturlichfrisch" linked to this thread on modmyi which has further speculation on what, exactly, AT&T might be basing their guesses on.