According to Scott Lowe, the cost/benefit of mobile tethering is very clear. Before you make a decision, consider the additional cost, performance, security, and bandwidth caps.
For the longest time, AT&T's inability (or, more accurately, unwillingness) to allow iPhone devices to be used for tethered Internet connections was a huge sore spot for many users and exposed a major weakness in the AT&T mobile product portfolio. However, last year, the company finally relented and users willing to pay an additional monthly fee have enjoyed the ability to tether their laptops and mobile phones, effectively using the iPhone as a gateway to the Internet for other devices, such as laptops.
More recently, AT&T and Apple have added "mobile hotspot" capability to the iPhone. This feature allows the iPhone to act as a wireless access point, which in turn uses the cellular data network to operate. In simple terms, a laptop connects to the iPhone using Wi-Fi (or Bluetooth or USB), which connects to the Internet using Edge or 3G. The configuration process is really a piece of cake, so I won't cover it here, but I do want to discuss some decision points to consider around the question of tethering.
Adding tethering to your existing account will cost another $15 to $20 or so on top of your existing data plan rate. The tethered data plan includes 4 GB of usage per month. This is not an additional 4 GB on top of the 2 GB you get with your iPhone data plan; you get 4 GB of data to use in total.
If you travel a lot or if you don't use much Internet at home, this additional $20 charge might be a perfect fit. Many travel hubs and destinations, including some airports and hotels, continue to charge for Wi-Fi access. These charges can add up pretty fast. That $20 per month might be much less expensive than accumulated charges for public Wi-Fi. At home, if you're paying $30 or $40 for Internet access and you're not using it a whole lot, a tethered data plan might save you a few bucks, as well.
Obviously, not all cellular networks have the same performance characteristics of their wired — think DSL, cable — counterparts. Whereas getting a 20 Mbps connection from the cable TV company is pretty common these days, you're not typically going to get similar speeds from a tethered mobile device. In general, I get 2 to 3 Mbps for downloads and 1 Mbps on the upload side. This is more than acceptable for what I need on the road, and it can even handle more intensive apps, such as Skype.
Latency, however, is a bit of an issue. In my testing tonight from a restaurant in Lowell, Massachusetts, I was seeing latency figures of around 250 ms. If I was trying to win a first person shooter game, I might not like this ¼ second of latency, but for browsing the web and doing remote desktop stuff, it's fairly acceptable.
Free Wi-Fi isn't free when it comes to security. Although the security ramifications around unsecured open Wi-Fi are well known, many places — including the restaurant I'm in right now — offer free, unsecured Wi-Fi. I opt instead to use a secured Wi-Fi connection to my iPhone-based mobile hotspot. This way, my traffic is encrypted and I can browse safely without having to worry about other people listening in. The extra few buck per month is worth it, since it allows me to do my work more securely that I could with open Wi-Fi networks.
Another item that needs to be considered when it comes to tethering is whether or not you can stay within the confines of the imposed bandwidth cap. In my case, that cap is 4 GB with my iPhone and AT&T service. However, at home, I have a wired Internet connection. I don't need to use my AT&T tethered service there, so 4 GB is more than adequate.
However, if I ever considered replacing my home service with my tethered data plan, I'd have to significantly change my Internet habits at home and stop downloading ISOs, stop watching NetFlix-based movies, and scale back pretty much everything I do for my job. As such, in my case, this move wouldn't be feasible. But between keeping my home Internet service and using my tethered device when I travel, I very easily stay within the confines of my data cap.
I have used the tethered plan at home a few times in a pinch, though. When my home service failed, I was able to keep working by using my tethered device. It was great to have a backup!
Given the kind of work I do and my job expectations, I would have a very difficult time without a tethered data plan. I've found it incredibly useful to be able to fire up a secure hotspot wherever I happen to be and get some work done. In my case, the cost/benefit is very, very clear. For others, it might be a little muddier. However, it's important to keep in mind that there are ramifications beyond simple cost. The added security of a mobile hotspot was also a key factor when I chose to go the tethered route and pony up some additional money for my monthly cellular bill.