The G1 phone's tethering applications are reposted after "accidental" removal -- they're just not viewable to T-Mobile customers -- almost all the G1/Android Marketplace users.  (Source: The Brisbane Times)
Tethering is in for Google's Android OS -- just not for customers of T-Mobile, the only carrier with an Android phone

Google raised quite a fuss when it began playing the role of censor on its Android Marketplace, removing tethering applications which the carrier of its G1 phone, T-Mobile, found offensive.  While a kill switch had been known for some time, Google had never before practiced such tactics and many hailed the move as the end of Google's calls for smart phone "openness".

Now Google has reversed its decision in a rather humorous fashion.  Google announced that it has reposted the offending tethering applications.  The only problem is nobody can see them.  G1 users are all registered with T-Mobile, and it turns out Google really did repost the applications, but that they are unavailable for T-Mobile customers -- virtually everyone with a G1 phone.

Google states in a release to the affected developers:

We inadvertently unpublished your application for all mobile providers; if you like, we can restore your app so that all Android Market users outside the T-Mobile US network will have access to your application.

Users are left to scratch their head at Google's graciousness in "correcting" this "mistake". 

Ultimately the incident highlight carriers increasingly tight control over handset makers and what capabilities they allow.  Handset makers like Apple and Google have flourished by nurturing application markets, but their carriers are carefully regulating these markets, weeding out applications which overlap with their service. 

In the case of smart phone tethering, typically an expensive addition to plans on top pre-existing data plans, it’s easy to see what the carriers have to lose if customers find a way to get this service for free.  

"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)

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