AT&T to Offer IPhone Tethering Service, Matches Verizon

AT&T today confirmed that iPhone 4 owners will soon receive hotspot functionality, in a move to match the offering from rival Verizon, as both carriers sell essentially identical Apple products.

The Dallas, Texas-based carrier said that users who upgrade to iOS 4.3, released on March 11, the same day the iPad 2 goes on sale, will be able to use their iPhone as a Wi-Fi hub for other devices, for a $20 a month fee. In return, they’ll also get an extra 2-gigabytes a month, on top of the 2-gigabytes from their $25 a month data plan. That’s a total of 4-gigabytes for $45. Verizon charges around the same rate.

“Our customers want to connect as many devices as possible,” said David Christopher, AT&T’s marketing chief. “We want to extend the benefits to smartphone customers on our tethering plan. This delivers more value today for the price they’re already paying — and that’s what our customers want.”

For the first time ever, AT&T is competing without an Apple advantage. Verizon, which started selling its version of the iPhone 4 last month, is also launching the iPad 2 next week. Both ATamp;T and Verizon iPads, aside from network technology, are essentially identical.

That means AT&T will now have to compete on the attractiveness of its data packages and the quality of its network, which has been notorious for being slow and unstable. In fact, when the iPhone 4 was released in June, congestion from data-heavy owners crippled its network in urban areas like New York City and San Francisco.

Regardless, AT&T has spent billions upgrading its infrastructure, in an attempt to repair its damaged reputation. And with a new hotspot deal, it aims to go toe-to-toe with Verizon and show that the new improvements can handle even more traffic.

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