Confirmed: the following providers allow smartphone tethering:

Dodo - Call 1300 136 793. Check out their $39.90 Magic SIM plan – 5GB data!

Amaysim – Call 1300 302 942. 4GB of data with their $39.95 Unlimited Plan!

What is tethering?

Tethering is the act of using your smartphone as a mobile broadband modem. It’s also called mobile hotspot, personal hotspot, and a couple of other names.

Most people get a couple of GB of data with their mobile plan that they can’t use, because smartphones are mostly incapable of pulling off the type of data-hungry applications that PCs are capable of- specifically, browsing full websites, downloading movies, or even having many web applications open at once. So many people still go and purchase a mobile broadband device separately, to use on their laptop (or even a separate SIM to go in their tablet). This is an extra expense that might not be necessary.

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We’ve written extensively lately on the subject of mobile broadband. We’ve answered a few Ask-The-Expert enquiries (here and here) and also written a detailed piece on the problems relating to increased mobile data use.

Click here for our recommended Mobile Broadband plans – or call Virgin on 1300 768 103. Plans up to 20GB!

But the bottom line is this – Australians want internet on the go, and for the time being, providers are pushing it. That may change – Optus’ parent company, SingTel, has started reducing the amount of mobile data included with their plans in the face of dwindling airspace in their Asian markets; Optus may have to do the same soon. And Optus provides network access to many big mobile data providers like Dodo and Virgin, so we may see plans here start to get even more stingy than they already are.

At Compare Broadband, we usually try to emphasize ADSL2+ as a better choice for a home broadband connection. This is broadband over existing copper phone lines, and even with the associated line rentals, it provides vastly better value than mobile broadband - except of course in one big way, and that’s portability. But many of the frustrated people we hear from and who visit our site are coming specifically because they don’t understand the difference, and have been suffering on an overtaxed mobile broadband network for years.

Still, people need to access the internet on the go. Thankfully, the one advantage of Mobile Broadband, the portability one, does have an alternative that most people overlook – smartphone tethering. Most smartphone plans come with data included- ranging from 200MB to 5GB. Most phones can actually become modems – allowing you to use your phone’s data plan on a more input friendly device, like your tablet or laptop computer.

Form Factor

The main reason more people don’t do this is because of a misunderstanding of form factor. If you break down mobile broadband, what you’re really dealing with is this:

-          a device with a small antenna inside, capable of picking up a radio frequency used by a mobile network operator.

-          A SIM card, which authenticates your device against the network: in other words, the SIM card contains data that identifies you as a paying customer to that network.

-          An internal modem, which takes the signal, unpacks it, and translates the data into something your computer (or phone, or tablet) can turn into webpages, YouTube videos, etc.

USB Dongle

The most common device used for Mobile Broadband is the USB modem, often referred to as a ‘dongle’. Dongle is a generic term for any add-on device that increases your computer’s feature set, but it most commonly gets used in this context.

There’s no better way to put this: the USB dongle is really cool. It takes something complex and mind-numbing, like a broadband connection, and narrows it down to a tiny, simple device that fits in your hand and just goes POP! Right into the USB port on your computer. It’s cheap and portable. It makes you feel like a secret agent, carrying around THE ENTIRE INTERNET right there in your hand.

It’s also terrible. This is just a matter of physics – that small size also means a tiny antenna. And because it runs off the gentle voltage provided by your USB port, it also has no grunt at all. They’re also cheap and easy to make, so people who make them tend to be…y’know…cheap and easy.

So a USB Dongle rates a solid 10 for form factor. But it’s right down near 0 for overall function. It will provide the overall worst ability to collect a steady signal and use the internet.

AC powered Wi-Fi Modem/Router (or Gateway)

Now we’re talking. The flip side to all of this is using a modem that is powered by 240v mains power. Plenty of steady power. Larger build, so it has larger antennas (including telescopic antennas that collect even more signal). And then they take that internet connection, do all the modulating (ie. turning it into computer language) and re-broadcast the connection around your home on a different radio frequency. This other radio frequency is Wi-Fi, which carries a lot more data per second, but only up to a range of about 50 metres (which is why the actual networks don’t use that frequency range). And because Wi-Fi creates a little bubble in your home protected by a password, you’re only sharing it with the people in your home, and not everyone in the neighbourhood connected to a local mobile tower.

This provides the best commonly used way to control a mobile broadband signal and create a steady, reliable connection – but it needs a power mains! You lose the portability advantage! You may as well get that ADSL connection (which can still use Wi-Fi in your home) and get thousands of times more data for the same price, as well as faster speeds and better reliability. Also: no-one sells them anymore. They've been made obsolete by...

Pocket Wi-Fi

This is a pretty good solution. It offers the sharing function of the home Gateway. You could put it in the house in a spot with good coverage, and then your computer could connect via Wi-Fi. But because its battery powered, it can go dead at inopportune moments.

Smartphone

Most smartphones, particularly iPhones and higher-end Android phones from Samsung and HTC, have all the same ingredients as your mobile modems – they have a SIM card inside. They have a modem inside. And the plan you pay for comes with a few gigabytes of data to access the internet.

With a smartphone, you’re paying for a mobile broadband service that also, frankly, isn’t ideal. But you’re only paying for it once. If you have a smartphone already, you don’t have to pay for an ADDITIONAL mobile broadband device.

In effect, tethering can either turn your phone into a little modem, which is then connected with a USB cable to your computer; or it can be turned into a Pocket Wi-Fi device, using its own internal Wi-Fi chip to broadcast the connection out, for your laptop to link in to.

Here’s an example of how to do it with an iPhone 4, running iOS 5:

Click on settings

Click "Personal HotSpot"

Switch to ON

Then get out your other device, and in the Wi-Fi settings, you should see your phone. Here it is on an iPad:

And here’s how to do it with a Huawei Epic running Android 2.3

Just for fun, let’s do a price comparison.

Virgin Mobile Broadband – 6GB for $30 a month, free USB modem included.

Virgin $59 Fair-Go Mobile Plan – Includes $700 call and text credit, 3GB of data, excellent free handsets (including the Samsung Galaxy S2 and the HTC One X). And of course, the mobile service.

So instead of paying, say $60 for your phone plan and a separate $30 for mobile broadband, you’re getting a phone plan for $60 a month that includes a device that can turn into a mobile Wi-Fi Hotspot for when you’re out and about. Sure, 3GB isn’t a heap – but it’s good enough for most people, and it’s actually difficult to use up 3GB on your actual mobile.

This is just one example – there are even greater savings for customers who don’t need a new handset, and just need a service. Amaysim has a $39.90 plan that includes unlimited free calls, unlimited text, 4GB of data – and they encourage tethering! Dodo has a similar plan that includes a whopping 5GB of data.

Please don’t do that

Smartphone tethering is a bit of a scary proposition for network operators, to be really frank. The data included with smartphones is usually generous, because the input method – your phone – doesn’t allow for heavy duty things like illegally downloading big movie files, or playing complex online games. Even then, Apple and Google can program the operating system on your phone to say “If a file is over 10MB in size, or if you want to stream data at a high bitrate, then the phone must be connected to a Wi-Fi connection”. In other words, it can prevent you from using high-data munching services when on 3G mobile networks, and instead make you wait until you’re connected to a Wi-Fi modem that is being fed with a fixed-line connection.

This is why people proudly say “I get 1GB a month, and I hardly use any of it!” It’s been engineered that way. Most people won’t be able to actually use their mobile phone’s data plan to anywhere near what they’ve been offered.

BUT…if you hook up your phone as a connection to your laptop, you can then use your laptop to access data-hungry services. And even at the slower and more unreliable speeds of mobile broadband, that can both easily max out your data, AND heavily tax the resources of that network.

If you can’t beat ‘em…

To start with, every provider charged people to tether, or proposed doing so (as AT&T did in the US). This posed a couple of problems. The first was that it wasn’t strictly legal – if a customer has paid for 4GB of mobile data in their plan, and their device has a tethering option, then charging people extra just because you’re not prepared for the consequences is a little iffy.

The next issue was that it encouraged people to hack their phones (‘jailbreaking’ in the iPhone world, ‘rooting’ in the Android world) to get apps that hid the fact you were using your phone this way, from the network operator. In other words, If you didn’t pay the additional $20 or so a month for a tethering plan, then the feature would be locked on your phone. But you could just hack your phone to get around that, and then you’d be tethering AND you would hate your network provider.

Eventually, both here and in the US (and other markets), providers gave up. Tethering was allowed for free, it just wasn’t advertised. It changes from time to time and plan to plan – you can be sure that if a phone plan looks too good to be true, one of the main conditions on it is that tethering is not allowed, or attracts higher charges. So before you do this, check with your service provider that the feature isn’t charged separately.

Get it while it lasts

For years now, networks have touted mobile broadband as an acceptable alternative for fixed-line connections like ADSL2+. They’re starting to see now that people who don’t know any better will treat it as such, and start taxing the network heavily. On any one day, it is estimated that Telstra, Optus and Vodafone’s mobile networks reach 90-95% capacity in heavily populated areas, where mobile data users AND mobile call users are all on at the same time, and just a few more will cause calls to start dropping out. That’s why mobile operators are frantically upgrading their networks. But if they upgrade their networks to double capacity, and then start offering higher data allowances then they do now, then the capacity will just get reached again quickly.

As a result, many operators are slowing down their campaigns to offer mobile broadband as a good home-based solution, and returning to the line that mobile broadband is primarily for use while out and about, and that you should have a larger capacity fixed service at home. Optus (1300 137 897) are doing this a little – with their mobile plans $89 and above, you get a free fixed broadband connection with 50GB of data. In this way, they can encourage people to offload their heavy data use for at home, and leave the Optus Network free of heavy use the rest of the time.

So expect operators to crack down on mobile tethering at some point, as they look to conserve what bandwidth they have. But for now, if you still need the portability of mobile broadband and already have a smartphone, consider tethering as a way to save on buying a whole other service.