How to avoid tethering fees with an unlocked phone
Source: Amy Gahran

Two leading U.S. wireless carriers, Verizon and AT&T, appear to be cracking down on mobile "tethering" -- or using a cell phone to get a laptop onto the Internet.

To get a sense of how consumers can avoid tethering fees these carriers charge, I spoke with Myriam Joire, mobile editor for tech blog Engadget.

It can be tricky to do this without getting caught.

And these instructions should come with a disclaimer: Avoiding tethering fees is a breach of most mobile contracts.

Carriers have been catching people who use free tethering apps for jailbroken or rooted phones, such as MyWi. But there is another way to avoid tethering charges: Use an unlocked, unbranded smartphone.

Joire recently sat down with me to explain how to do this.

For a phone to be unlocked (or unlockable) it must have a SIM card -- the component that houses the user's account data. This means it must be operate on GSM network technology. In the United States, the only two GSM carriers are AT&T and T-Mobile. Phones that run on networks using CDMA technology (such as Verizon, Sprint and most discount carriers) lack SIM cards.

The key to this strategy is to do your homework, she said.

First, research which GSM carrier provides the best service in the locations where you spend the most time or travel to most often. (Rootmetrics can help with this.)

Then choose a phone you want that will work on your chosen carrier's network, and research online whether it's available in an unlocked version.

Many -- but not all -- GSM phones will work on either AT&T or T-Mobile. So before you buy a phone, Joire said you should read online forums to make sure that other people have successfully activated and used the phone and carrier you're looking into. What kinds of problems did they encounter (if any), and how did they solve them? Don't be the guinea pig.

Why 'unlocked' and 'unbranded' matter

According to Joire, an unlocked phone is not technologically tied to a particular carrier's network, so it can work on other carriers' networks. This offers a greater choice of plans for phone and data service, which increases your chances of saving money on phone bills.

An "unbranded" phone does not use carrier-supplied "firmware" -- the fixed programming that operates the phone at its most basic level.

Joire explained that carrier-supplied firmware typically is programmed to alert the carrier whenever you tether your phone to another device.

"That's the easiest and most obvious way that your carrier can tell whether you're tethering," she said. "And that's why if you want to do free tethering, you really should replace the firmware."

New unlocked phones typically do not come with carrier-branded firmware. So if you want to do free tethering, buying a new unlocked phone is the safer and more efficient option because it allows you to skip a few additional complex and potentially risky steps.

How to buy an unlocked phone

In the United States, buying an unlocked phone domestically is surprisingly hard.

A few major U.S. retailers such as Best Buy occasionally have limited inventories of a handful of unlocked phone models for sale.

"Their salespeople are trained to push you into signing up for a carrier contract, but you aren't required to do that," Joire said.

If you want a wider selection, you can shop for an unlocked phone directly from manufacturers (such as Nokia) or through online retailers such as Expansys or Amazon -- rather than from a wireless carrier.

Online retailers often sell phones intended for overseas markets, so it's important to research carefully which radio frequencies ("bands") your carrier of choice uses for different speeds of data service. Make sure the phone you get will support the speed you want on the carrier you want. And if you travel internationally, you should get a "quad band" or "penta band" GSM phone.

You can also buy new or used unlocked phones through eBay and Craigslist -- with all the usual caveats and cautions that apply when making purchases that way.

More complex alternative: Unlock and unbrand your phone

If the phone you really want is only available in a carrier-branded version, you can opt to buy it unsubsidized with no contract.

This costs significantly more upfront, but it can expand your data plan options, which can end up saving you more money over time.

Then, if it's a GSM phone, you can unlock it and bring it to the carrier you want and negotiate to get the plan you want.

Joire recommends searching online for someone selling the unlock code for the carrier network of your choice. Typically these cost $10 to $40. There are also businesses that will unlock phones for a fee. But she cautions that an improperly unlocked phone can become unusable.

Once you've unlocked a branded phone, there are a couple of more steps.

If you want to do free tethering, Joire strongly recommends replacing the carrier-supplied firmware with third-party firmware. This is because some carrier settings (such as tether tattling) may remain after a phone has been unlocked.

For Android users, this means first "rooting" your phone and then installing something called a "custom ROM" such as CyanogenMod. Both of these processes entail some risk of impairing or disabling your phone, so research carefully before you try it.

It's possible simply to root an Android phone and then use an app to provide free tethering, but this is exactly the loophole that carriers are cracking down on. If your phone still has its original firmware, it can rat you out.

For AT&T iPhone users, the "jailbreaking" process will also unlock your phone. (iDownload Blog explains the difference between jailbreaking and unlocking.)

It's difficult if not impossible to unlock a CDMA phone (including the Verizon iPhone) -- and anyway, according to the Blackra1n blog, there's little point to this since getting an unlocked CDMA phone activated on another carrier is tough. So if you want to do free and fairly safe tethering on a CDMA phone, you'll probably have to stick with your original carrier and plan -- just root your phone and replace the firmware.

You will need a data plan

In the U.S., you can purchase a mobile data plan from AT&T or T-Mobile -- and not necessarily on a two-year contract with a steep early termination fee (the standard for U.S. smartphone carrier contracts). If you look, you'll find there are some prepaid, post-paid, month-to-month and one-year options available.

Joire said: "T-Mobile is the only U.S. carrier left where you can walk into the store and get a post-paid monthly plan with no limit, no contract and no early termination fee."

But if the planned AT&T/T-Mobile merger happens, such options may not survive.

If you intend to tether, Joire recommends getting a tiered data plan with a generous base monthly data allowance.

You may not need to sign up for a regular phone service plan. According to Joire, it's possible to buy a data-only SIM card and use Internet-based telephony services such as Google Voice or Skype to make and receive phone calls.

Happy (free) tethering!

Once you have an unlocked, unbranded phone with a data plan you're good to go for free tethering. Just be smart about it: Don't be a data hog.

Joire cautions that in addition to tattletale firmware, carriers may also be able to detect unauthorized tethering by examining your data traffic -- a technique called "packet sniffing."

"Packet sniffing is not trivial," she said. "It requires a lot of computing power, so it would be prohibitive for a carrier to do this for every phone all the time. What they're probably doing -- we don't know this for a fact, but it's very likely -- is using packet sniffing or other technologies to check out customers who have suspiciously high data usage."

Frequent streaming of audio or video, or using torrents (peer-to-peer file sharing), are the main things that can drive data usage through the roof.

"So don't leave your cloud music service playing while you're tethering, and don't download a bunch of movies," she says. "As long as you keep your data usage reasonable, your tethering will probably fly under the carrier's radar."

If you do get caught, the worst that will probably happen is that your carrier might start applying a tethering fee. But if your phone is GSM and unlocked, and if you haven't signed a long-term contract, you could probably switch to another carrier at that point.

The opinions expressed in this post are solely those of Amy Gahran.