In more remote areas of New Zealand without 3G coverage, iPhone tethering is still technically possible, but not really a good idea. Without 3G, the iPhone falls back on an older, slower data connection type known as GPRS -- and if you think EDGE is bad in the States, GPRS is an order of magnitude worse, with speeds that are basically equivalent to wireless dialup. I attempted GPRS tethering only a couple of times, but the browsing experience on my Mac was excruciating enough that I abandoned it swiftly.
Vacations aren't the only time iPhone tethering has come in handy, either. My university's Draconian port-blocking is so strict that I can't even upload pictures to my MobileMe galleries when I'm hooked up to the uni's wireless network; I can download several gigabytes of TV shows from the iTunes Store, but uploading a few megabytes of photos or a couple files to my iDisk is apparently out of the question. So far I haven't run into any sites that run fine over traditional broadband but are restricted over the 3G network -- even Bittorrent clients like Transmission still run through iPhone tethering, though with the limited data available on plans down here, it's not a good idea to leave it running for more than a couple minutes at most.
While many cafés and libraries in the States offer free Wi-Fi to customers, I can count on one hand the number of free Wi-Fi access points I've come across in New Zealand. Once again, iPhone tethering comes to the rescue. If I need to get some work done on the go and don't feel like paying through the nose for Wi-Fi (and trust me, I don't), my iPhone's data connection, something I'm already paying for, is always at hand.
Data plans down here were traditionally far more restrictive than in the US; when I first got my iPhone 3G last February, I had 250 MB of data per month. That doesn't sound like a lot, but I never even came close to bumping into that limit until iPhone OS 3.0 came out and enabled tethering. Fortunately, around that same time Vodafone NZ upped iPhone and smartphone users' data caps by 3 GB across the board, and while it was only supposed to be a three-month promotion, they've pushed back the expiration a number of times. Hopefully they eventually make the promotion permanent, because it's doubtful many people are taking full advantage of the extra data. I can say that with confidence -- based on my own heavy usage of iPhone tethering over the past few months, it's unlikely more than a handful of people are using in excess of 2 GB on their monthly plans, much less the full 3 GB.
This brings me to the final advantage iPhone tethering has provided, but this is one people in the States are fortunate enough not to have to worry about. My home broadband is limited to 20 GB of data per month, and that's total data, spread between downloads and uploads. I regularly bump into that broadband cap about a week before my rollover date, which means I can either pay another $30 for an additional 20 GB of data or suffer with dialup speeds on my home network until rollover. Once again iPhone tethering saves the day -- my home office has great 3G coverage, so rather than feed Vodafone more money than I already do for broadband access, I've been supplementing my home broadband cap with the additional data from my iPhone.
This is the point where I have to bring up AT&T's reticence toward enabling tethering in the States, and why their excuses for holding back on enabling it are full of FAIL. Last week, while I waited for my rollover date and the restoration of full speed to my home broadband, I spent a full seven days getting all of my internet access via iPhone tethering. Other than holding off on downloading any TV shows through Transmission, I didn't change my browsing habits at all; I still watched YouTube videos, I still browsed all of my normal sites, I still got work done for TUAW, and I still spent waaaay too much time on the internet.
With my nominal browsing habits still intact, how much data do you think I used over the course of one full week of iPhone tethering? A couple of gigabytes at least, right? No. According to my iPhone, I sent 95.1 MB and received 523 MB, for a total of 618.1 MB of data. That's one week of tethering for around eight hours a day. Averaged out over the whole month, I'd have come pretty close to using up the full 3 GB on my plan. This is the data usage AT&T claims it can't handle?
Granted, many more people will utilize iPhone tethering in the US than would use it down here in NZ, but people in the States aren't likely to use it for several hours a day every day. Even with all the advantages iPhone tethering offers, few people are going to use it at all, much less for extended periods of time or with exorbitant amounts of data usage. With all the advantages tethering offers, and with the limited amount of data it actually consumes, if I was stuck with AT&T's recalcitrant claims of not being able to handle all the extra data usage tethering would cause, I'd put the pressure on them any way I could until they finally relented and gave their customers access to a feature that almost everyone else in the rest of the world enjoys.