Users of grandfathered unlimited iPhone data plans will be bumped to a 2 GB capped plan with extra tethering fees if they continue to jailbreak and tether.  (Source: Gizmodo)

AT&T offers the nation's second highest data costs, and unlike Sprint and T-Mobile refuses to provide customers with unlimited data.   (Source: Koz)
Company says it's only being fair

As promised, AT&T, Inc. (T) has begun to crack down on those who tether illegally on unlimited plans.  But some customers hope that new apps may hide them from the company's purge.

The issue began last June when AT&T scrapped its $30 USD/month unlimited smartphone data plan.  In its place the company installed a cheaper plan -- $25 USD/month -- but with tiers/caps.  With the new plan you only got 2 GB of data, and had no option to purchase "unlimited" data.  AT&T also slapped on a $20 USD/month tethering fee.

AT&T softened the blow, with a grandfather clause for current customers, allowing them to enjoy unlimited data at their previous rate.

That move allowed some iPhone customers to jailbreak their phones and buy apps like the MyWi app, which allows for USB, Bluetooth, or Wi-Fi tethering for a one-time fee of $19.99.

In January, AT&T caught wind of this and issued an ultimatum to illicit tetherers on grandfathered unlimited plans, saying it would find them out and punish them.  Now it has revealed details on those punishments, which are set to begin briefly.

The company intends to send threat letters to customers.  It describes:
Earlier this year, we began sending letters, emails, and text messages to a small number of smartphone customers who use their devices for tethering but aren’t on our required tethering plan. Our goal here is fairness for all of our customers. (This impacts a only small percentage of our smartphone customer base.)

The letters outline three choices:
    1. Stop tethering and keep their current plan (including grandfathered unlimited plan)
    2. Proactively call AT&T or visit our stores and move to the required tethering plan
    3. Do nothing and we’ll go ahead and add the tethering plan on their behalf — after the dated noted in their customer notification
The crackdown will reportedly begin next week, according to 9 to 5 Mac.  

Service changes will be implemented shortly after customers receive their letters, if AT&T does not receive a response.

MyWi, arguably the most popular illicit tethering app, is vulnerable to the crackdown because it labels its traffic as tethered traffic in the same way the iPhone's standard tethering system does.  However, two other apps -- PdaNet and TetherMe -- offer a "hide" function, that disguises the identity of the traffic.

However, prolific users likely will be found out by AT&T regardless of what app they use.  Reports a commenter on the iPhoneDownloadBlog, "I used the new PDANET since the day it was released a few weeks ago. Shortly after and consistent with 4.3 upgrade I received a [warning] email from ATT."

Of course, customers could always get a bleeding edge Android smartphone on Sprint Nextel Corp. (S), who offers unlimited data at a cheaper rate than AT&T's capped plans.  AT&T, perhaps unwittingly, gave those looking to jump ship an advantage, exempting iPhone customers from its early termination fee hikes.

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