New iPad may push AT&T to drop restrictions

Apple seems to be dragging AT&T slowly but surely into the real world, with the iPad released today providing the most recent schooling on how to satisfy customers — or at least annoy them less. The new iPad allows tethering of other devices to a 4G data plan. When the iPad was announced last week, AT&T hadn’t planned to support tethering (whereas rival Verizon Wireless happily said it would), but Apple forced the issue by making tethering a basic feature of the new model. Now AT&T says it’s “working on” the issue, representing some progress.

Not that AT&T has grasped all the lessons: AT&T took heat this week for threatening to cut off service for a user who had successfully sued the carrier in small-claims court over its “unlimited” data plans for his iPhone. However, the user may have no choice but to talk or leave AT&T, as the Supreme Court last year affirmed that phone contracts forcing customers to go through arbitration rather than the courts are valid — and pretty much every phone contract has that clause in it, whether you know it or not. [Update: Late today, AT&T dropped its threat and paid the user the $850 he won in small claims court, thus dropping its appeal and, for a change, doing the right thing.]

The ham-handed response to the lawsuit is consistent with AT&T’s generally punishing approach to providing cellular data service. AT&T wants iPhone users but not the 3G data consumption their iPhones encourage. Over time, Apple has forced AT&T to be less restrictive, moving it step by step into policies that make sense for a smartphone or tablet user. (To their credit, the FCC and Congress were making noises about these issues as well, but AT&T’s less-obnoxious plan changes have typically coincided with new iPhone or iPad launches.)

The problem started in the very first days of the iPhone. AT&T, like most carriers, offered unlimited data plans in those early stages but soon regretted it as people used these devices way more often than AT&T had ever dreamed. (We forget that no one seriously thought of a phone as a way to get data other than simple text messages before the iPhone.) AT&T stopped offering such unlimited plans nearly two years ago, but grandfathered “unlimited” customers into its coverage. Since then, it’s tried to stop those overly active (from AT&T’s point of view) grandfathered users through throttling connection speeds or, at one point, threatening to cut off 3G data access until the next billing cycle.

When Apple added tethering capabilities to 2010’s iPhone 4, AT&T was aware enough not to allow the use of tethering from iPhones, as it understood a computer’s data consumption would dwarf an iPhone’s data usage and eat up most of the bandwidth for a given cellular connection. (People forget that in cellular, they are sharing bandwidth with everyone else connected to the same tower.)

Apple has generally let the carriers engage in their unfriendly policies, such as forcing customers to use an AT&T or Verizon partner when traveling overseas, rather than going with a local carrier as chosen by the user. But when it came to the iPad, Apple demanded several changes from carriers:

• Not require a commitment for data usage (iPad data plans are month-at-a-time).
• In the case of AT&T’s GSM-based iPad and iPad 2, allow the use of a foreign SIM when abroad (most foreign countries use the FGSM technology, whch the Verizon CDMA-based iPad 2 doesn’t support, so the notion of a SIM didn’t apply).

Now with the third-gen 4G iPad, Apple has added one more unwelcome requirement on the carriers: tethering. It’s a standard feature on the iPad, as it is on the iPhone 4. But unlike with the iPhone 4 (or Android device), you don’t have to pay for the right to tether; you just can, at least on Verizon. Of course, if you use more data and exhaust your plan, you’ll need to buy more or search for Wi-Fi, but there’s no tethering surcharge.

AT&T’s new 4G iPads won’t tether — at first. But after a minor uproar ensued once would-be buyers figured this out, the company now says it is “working” to enable the tethering on the 4G iPads it sells and that hit the shelves today.

I know it doesn’t seem like a lot, but it is progress. And it happened only because Apple is running the show.

This article, “New iPad may push AT&T to drop restrictions,” was originally published at InfoWorld.com. Read more of Galen Gruman’s Mobile Edge blog and follow the latest developments in mobile technology at InfoWorld.com. Follow Galen’s mobile musings on Twitter at MobileGalen. For the latest business technology news, follow InfoWorld.com on Twitter.