Why O2's iPhone tethering plans are a serious case of double-charging

9 June 2009

If you want to see a service provider under fire, have a look at O2's Twitter stream of messages to customers. While the iPhone 3GS is a decent handset, the terms and conditions under which it's available are causing plenty of people's blood to boil.

We can understand why O2 won't let existing contract customers upgrade from their 3G to the new 3GS; the 3G handsets were subsidised by O2, so they'll lose out if they let people upgrade part-way through an 18 month contract.

What's bugging us is the tethering feature that'll be available on both the 3G and 3GS with the new 3.0 firmware available next week, which will allow the handset to act as a modem for a laptop. O2 are charging £14.68 per month for a 3GB allowance bolt-on, and £29.36 for a 10 GB allowance bolt-on - making it as expensive as an O2 3G dongle, and more expensive than some other service providers.

O2 are shouting about the benefits of this service, since a one month minimum term means you can cancel without consequence. It's their justification of the price that doesn't stack up, however; O2 are stating that iPhone tethering costs more as it uses a lot more data than traditional browsing on your iPhone itself.

There's already an unlimited data allowance rolled into all iPhone contracts, but of course that allowance is subject to O2's excessive usage policy. But what is that policy? The closest we could find to it was here, which suggest a limit of 1GB  of data per month for the iPhone.

Given that O2 want to charge you for data you're already paying for, it's important they explain why. If tethering incurs an additional charge because it contravenes their excessive usage policy, then surely O2 need to explain that policy?

We phoned O2 Customer Services and asked where we can find the policy, and this is what we were told:

"There isn't really a policy as such. Since the excessive usage policy was brought in two years ago, it's only ever applied to a minimum number of people. There's not an actual amount, there's no limit actually set. It's there to prevent an iPhone user using their handset online constantly or downloading very big files all the time.

What happens is the systems at O2 constantly monitor accounts, and if they notice a customer using a lot of data, we'll send a text message asking them to restrict their use. If they don't, their data service might be suspended until the beginning of their billing period."

So O2's is entirely arbitrary, with no set limits; any restriction imposed by this nebulous policy seem based on intensive usage, rather than light usage that'd be perfectly adequate for occasional tethering.

In other words, abiding by O2's existing excessive usage policy as we understand it, there is no reason why customers shouldn't use the iPhone for tethering without buying the bolt-on, providing the data usage is not excessive. If 1GB of data usage is acceptable, that'd be a huge benefit to the occasional user. Indeed, the likes of Three already offer a 1GB mobile package called broadband Lite, so there's certainly is a market. The problem is that O2's excessive usage policy has no stated limits, yet every iPhone contract is subject to it without question.

For O2 to argue that tethering is more data-intensive is both a nonsense and a smokescreen; if a customer is already paying for a considerable amount of data as part of their monthly contract, what difference does it make whether it's used intensively over a few days, or gradually over one month? Selling a bolt-on above and beyond a fixed amount, say 1GB, would make real sense. That would allow customers to make use of the data they are already paying for and allowed to under O2's own terms. As it stands, unless O2 are prepared to explain themselves more thoroughly, they are guilty of double-charging a loyal customer base.

TOPICS:   Mobile


  • MrRobin
    It's disappointing, but not really surprising, that O2 are introducing these new bolt ons for those of us who would like to use the tethering feature. It isn't clear to me whether you can actually try to use the tethering without first buying a bolt on? Their lack of definition of 'fair usage' does not help but these policies (not just from O2) are one of those things that although seems restrictive actually benefits 99% of customers -- they do ensure that their servers don't get overloaded because of a minority. This minority would grow considerably if users start to use the tethering under normal contracts and the limit would probably drop from 1Gb to 100Mb or less. Ultimately, the bolt ons pay for the extra servers that will be needed to continue providing the 3G service. It's a shame that the prices are just as dear as O2 dongles but that's what happens when you get a monopoly.
  • Alex
    Tethering quite clearly *is* more data intensive though - an iPhone is a far more restrictive internet client that a full desktop PC, and that's not even including things like torrenting. They can offer "unlimited use" for the iPhone only knowing 99% percent of users won't ever start to use amounts that will harm their profit margins. However, you switch that to regular laptops, and suddenly that figure is going to start looking much more like (say) 50%. They're a business, not a charity.
  • Rob L.
    Techradar have a good article about o2 being the iPhone killer, rather than the Palm Pre or Google Android: http://www.techradar.com/news/phone-and-communications/mobile-phones/the-iphone-killer-isn-t-a-rival-handset-it-s-o2-606764
  • wellsie
    a reduced charge over there dongles would be fare but I was hoping for this to be included in the monthly cost even if it was only on the highest tarrif. Wish I could get one but carnt afford it!
  • Junkyard
    @ Alex - so what, just put a cap on data transfer, whether tethered or not, inclusive in the contract. Let's say 1Gb - it's a bit mean, but it'll cover many peoples' usage. Then allow people to buy a "bolt-on" if they need more. Even better, just charge them a reasonable price for the extra bandwidth they use. We all know this isn't going to happen though. Being reasonable, and treating your customers well, just doesn't come into the equation when a company has a monopoly.
  • Jill
    Don't all contracts with free mobile internet restrict it to the phone, not allowing you to plug it into a computer?
  • Paul S.
    Alex - it doesn't matter a damn if a laptop uses 10Mb where an iPhone might use 1Mb; it just means the laptop uses a data allowance ten times quicker. A laptop being data intensive just isn't the point. The bottom line is that an iPhone user has a device already capable of tethering, and is already paying for a data allowance - it stands to reason that they should have *some* tethering capability, whether it's 100Mb, 500Mb, or 1Mb. But because O2 won't define that allowance, they're able to openly abuse their position. Every iPhone customer has agree to abide by the excessive usage policy, a policy that O2 can't actually produce - is that really acceptable? MrRobin - I appreciate what you're saying, but my impression from O2 is that excessive usage of data isn't any sort of issue right now. Would it be if they stated a limit to the data allowance? Possibly. But if every iPhone user had 1Gb of data to use a month, it doesn't follow that everyone would use it. Again, to charge for tethering when users are already paying for a data allowance isn't right. If O2 explained their position, I might feel differently.
  • rob
    If you have a PAYG phone then you pay O2 £3 for every 1MB. That would be £3000 (ish) for a 1GB allowance. Ouch!!!
  • CompactDstrxion
    Using a laptop IS more data-intensive. iPhones do not support flash or other rich web content so when the web pages are viewed on a full PC browser they can download many times more than Safari on the iPhone.
  • Paul S.
    @CompactDstrxion - go back and read the article, I never said otherwise. What I said is that laptops being more data-intensive is irrelevant to the arguement. Whether customers use their data allowance on a laptop or an iPhone, they have paid for an allowance regardless. It shouldn't matter how quickly it's used - whether a data-intensive laptop gobbles it up in a few days, or an iPhone uses it over a month - the fact is the customer has paid for that service already. But since O2 won't say how big the allowance is, they're able to justify charging for a tethering service that iPhone users already have both the hardware and data allowance for.
  • Andy D.
    The BBC iPlayer works a treat on the iPhone. What if I wanted to watch a massive amount of the Beeb's output on my phone? How long would o2 allow me to do that before they unleashed their attack dogs? No one really knows. That's a bit shit then isn't it?
  • C
    But how do o2 know if you're using it connected to a PC or just using the built-in browser? Will the new iphone.version 3 software grass you up in some way?
  • Andy B.
    @C - user-agent sniffing? You could always use a secure tunnel though to encrypt your traffic. I'm guessing Apple must be implementing some kind of "network authority" check before unleashing the tethered goodness to see if you've bought an O2 bundle? Maybe it attempts to route traffic via a different user/pass than the normal phone traffic and that has the necessary purchase checks in place...? Something tells me either way that some clever sod will work out how to do it freemans.
  • Dan
    O2 do not have a policy for unlimited data allowance. They have a team of people that monitor usage and will contact specific users if they are using excessive amounts of data and may restrict them in future. This is pretty much arbitrary but it is a lot more than 1GB/month
  • LFC
    I have a SE c905 on o2 Pay Monthly that I have tethered to my laptop for months and never received a text warning meof the limit or anything. Strictly speaking I believe you are not supposed to do this according to the T&Cs but it is possible. I've never downloaded movies or torrents over it, just the usual web surfing so as not to attract attention, if at all possible. So is this Tethering Bolt-On just for the iPhone, or for all handsets?
  • LFC
    In answer to my own question, if you go through the sign up process for any other handset, a 'Mobile Broadband' Bolt On is available that is for Tethering, as well as a bolt on for Unlimited Web. The daft thing is, the Tethering Bolt On includes the Cloud Wifi access which is £7.34 on it's own. Why would I want Wifi access from the cloud if I have a tethered modem? They would be better as separate bolt ons at £7.34 each.
  • LFC
    And just to really take the piss, if you add the 'Unlimited Web' Bolt On to any other handset package, you then can't add the 'Mobile Broadband' tethering Bolt On as it says it has already been added. Class
  • bykergrove
    I dont have an iphone but i have the unlimited o2 bolt on... I cane it with youtube and emails browsing and downloading files onto my phone all the time... I haven't ever been sent a letter or anything but I doubt it would come to more than 2-3gb..... i can tether to my laptop with my phone and i will do this... o2 wont know i dont think and if I just surf (which is what i wanted to do anyway) then i reckon i'll be fine. I dont know how o2 will know if the iphone is tethered.... do you still get unlimited on your phone if you buy the tethering bolt on? or does it count to your 3gb allowance?
  • pauski
    What's an "iphone"? You are getting upset about something - it's hurting.
  • pEtPiG
    People, I've been tethering using iPhone 3G for 2 months, thanks to a software called PDANet (http://www.junefabrics.com/iphone/index.php). Trust me, the allowed bandwidth is virtually unlimited, i've been downloading ~ 400MB / a day for 2months already and received no warning text watsoever from O2. This software basically turns your iPhone 3G into a wireless modem and creates an ad-hoc wifi for other comp(s) to join, or you can connect your iPhone directly to a comp by the USB cable. I'm pretty sure there is a similar unofficial software found in Cydia (iPhone geeks would know what this is) which is free. I'll stick to my iPhone 3G, forget about 3G S, it's such a rip-off. The only (valueable) upgrade I could see is the 3MP camera which is nowhere need what I personally expected. Other features are from iPhone 3.0 OPERATING SYSTEM itself, NOT from the so-called iPhone 3G. Prove me wrong.
  • Francis R.
    @ U All - Shut up, sell your crappy iPhones, lose your sad life and go and do something worthwhile rather than 'downloading the latest app' or 'twittering' sad fuckers.
  • Tizer
    pEtPiG i'll prove you wrong...prove you wrong with my fist!
  • Meee
    Wouldn't worry about the data charges at this time. O2's service is so slow it's hardly worth bothering with for anything other than phone browsing. Bluetooth tethering willl be even slower...lol.
  • Daedalus
    Just so you know, O2 are fully aware of when you are and aren't tethering your phone to use as a modem. Furthermore, this is nothing new or special, O2 have never let phones be used as modems with the 'unlimited web' bolt on, so why should the iPhone be any different? This has been the norm for years, I guess it's just taken the sheep Apple fan boys to kick up a ridiculas stink about it. Stop wasting your time and get on with your lives, for petes sake.
  • V L.
    02 are scum, Vodafone are scum, I'm not buying the iPhone because of this, I'll stick to my two year old unlocked one :-)
  • N29Y1D
    What a precious bunch the iphone owners are... they expect heavily discounted upgrades, never hear nokia, samsung, motorola owners making the same whining noises, and now this tethering, of course they are going to charge. iMan up and stop whining.
  • Dave P.
    Sorry if this has already been stated... but tethering is locked down like the sim lock.... o2 need to enable it when you take the bolt on. You can't just use it and hope you don't get noticed - its blocked, if what I've read it to be believed anyway
  • Alex
    Hi to all in the UK I have spent an unfruitful half hour to O2 within which I got no useful information about why they are charging for the tethering service. The operator was helpful and spouted the company line over and over. We have not charged for tethering before etc. etc. After this I contacted OFFCOM who were most helpful, the more people that call them about this the better. So in a way this is a call to arms. EVRY ONE CALL OFFCOM ON 020 7981 3040 or 0300 123 3333. They have an irritating voice mail system, please work through it and complain about O2 and the tethering charge. OFFCOM will have to act if enough people call. In the mean time I will be writing to O2 at [email protected] and putting a reasoned case, they have 12 weeks to give me a response after which I can approach OTELLO and see were that gets us. All in all lets make sure they respond to us, we all know they will not give us a reasoned argument to the cost as there is none, so the more rope we get the higher we can string them
  • O2’s B.
    [...] week we pulled apart O2’s case concerning tethering charges for the iPhone. The fact of the matter is that while O2 maintain an excessive usage policy when it comes to [...]
  • joseph g.
    what i want to know is how likely they are to find out. i've been tethering a while with my jailbroken 3G and have never had so much as an sms from o2 about it. it would be more convenient to not have to go the jailbreak pdanet style route but if its the difference between free and £15 per month CHOKE i think i know which i'll choose!
  • Andy
    I won't bother with tethering, its to expensive and don't really need it, but its a shame. But O2 really could do with sorting out the 3G network first (very really get a 3g signal in wiltshire unless you swindon), otherwise what's the point.
  • Iain C.
    To me, "unlimited" means without limits. Simple! If there are limits, then companies like O2 should be forced to stipulate what those limits are and be prevented from using such language as "Unlimited data transfer". The use of such language is gross misrepresentation and the market needs to end its use where it clearly doesn't apply. I won't be paying the weasels at O2 anything for tethering my Mac to my iPhone. I'll just do it for free. It isn't that hard.
  • Iain C.
    @Andy, and the signal around Swindon is dire. How O2 managed to snag the iPhone partnership with Apple I don't really know.
  • Ben T.
    The data connection on the iphone is subject to compression this can be seen in images on cell network vs wifi so the data usage is the same i've clocked the page size's on the iphone and mac both with safari with developers tools and most site are the same or 10kb smaller on the phone. i've enabled tethering on my iphone and the setting are the same so i don't know how o2 could even tell unless i used it loads. Its my right as the owner of a unlimited internet plan with fair use
  • meh
  • David R.
    O2 used to have a 1Gb limit on the 'unlimited' iPhone deal, but after some googling I've established that they withdrew that for the iPhone at least. So there isn't any hard limit - they'll just send you a letter if you start seriously hammering it.
  • Flug
    Ive been using PDAnet on the iphone for the last 6-8 months. Dont have any other internet connection. Downloaded loads of crap including large update files, skype for about 6 hours a week, youtube etc. no torrents. Havent heard boo from O2. Im using the new tethering now, works pretty good. you beauty!
  • Anthony K.
    I recently wrote an article on my blog about o2 tethering. its nothing more than a way for them to make extra money by providing nothing extra. tethering isnt new, i have been able to "tether" my Nokia N95 handset to my pc using nokia pc suite for years. I bought a unlimited data bolt on for my N95, connected to pc suite via USB or bluetooth, selected my provider (O2UK) an hit connect, worked no problems and i downloaded a damn movie using my phones connection and not so much as a peep from o2. now o2 are basically saying, "oh yes you can tether any OTHER phone to your pc and we dont really have a set excessive usage policy, you just cant tether your iPhone, because we can make a profit by charging people for it" O2 have lost alot of respect for this stunt and i questioned them ecesivly on the phone about it, about why i can use the net on my pc with nokia pc suite at no extra cost but i have to pay to use my iPhone, the operator had no answers for me.
  • Billiybob
    F*€> o2 there "unlimited" iPhone data doesn't let you download large apps or watch BBC iplayer onthe iPhone itself, but can watch 30 min programme with 2 min wait b4 playin when tethered with pdanet. I don't want to go crazy. I only use about 500-750mB a month even when tethered. I just want to list stuff on eBay while sat traveling an hour each way to work most of the time not even on 3g. O2 should just let everyone tether and say the iPhone limit is Xgb (does any1 know, cuz o2 don't I've asked in 4 towns, all different) and charge if you go over on iPhone or computer. My iPhone is unlocked so o2 can suck my balls if they want me to renew contract.
  • John
    Robbing bastards
  • Anthony
    hey i was wondering, could i buy an iphone 3gs, either from o2 or say ebay, then unlock it or buy it unlocked, and use an asda or virgin sim in it? Cos then id be paying a nominal price for internet use
  • Brian
    For those people who are saying that O2 don't let people use their phones for tethering, on my windows mobile phone I have been using it as a modem with no extra charges for the last two years, including running a mail server off it whilst my connection was down, and never had any excess charge. This is quite frankly disgusting and I'm getting more disenchanted with O2 by the day
  • Garrilla
    It's not suprising that 02 do this. They all do. I had this with Orange with my HTC TYTN II, which acts a perfectly good HDPSA Modem exactly as a 3g dongle would. Some how though my data traffic via the mdoem would never be included in my World Data package. In the end I got a Vodaphone dongle and reduced my Orange Tarriff. I'm coming to the end of my time with the TYTN II now and *was* considering a iPhone but the paying a huge tarriff to have unlimited data and then not being able to use it with a laptop is just ridiculous as I would have to maintain my dongle also. It seems that being a mobile operator is licence to print money.
  • Garrilla
    It just occured to me that the case against this is that they are requireing you to pay for two services which you cannot use simultaneously. By this I mean that you cannot tether your phone to use it as a modem dowloading data to your computer and amd download data onto the phone at the same time. Legally, I believe this is a 'Sharp' practice.
  • Nathan
    Ever since I got my first Bluetooth handset (the wonderful T39), I've used a handset as a modem on the move. I have never needed to apply a 'bolt on', but simply use the contract's standard data package allowance. The double charge applied by 02 is to do with the iPhone being deliberately configured NOT to use the standard data allowance when tethered. The fact that you cannot use Bluetooth on the iPhone, but must use a cable to 'tether' it is seriously clunky coming from Apple. Also, I have just investigated the pricing for the 02 service and it clearly states that the data allowance is 'worth £15'. It doesn't actually seem to be worth very much if you have to buy more allowance simply to use it as a modem for another device. I wonder what Orange will come up with?
  • Nimrod
    To be honest the real issue is that this O2 are a business, they are in business for profit, the more profit the better for them, the policy to charge for tethering is to increase profitability, the management are paid bonuses for their profitability, so the charge that I am paying for tethering my I phone to my laptop is for members of the management of O2 to further their wealth. I do not like being charged extra so that members of O2 can buy themselves a new car, a larger house, a longer holiday, or a bigger pension. That is why I will be changing my service provider from O2 at the end of my contract. I would suggest that anyone who has a grievance with O2's policy moves their account, and hit O2 where it hurts, on their profitability.
  • georges
    O2 is jsut screwing Iphone users only, cause HTC users can easily tether anytime, Except for Iphone they have to go through a setup procedure to enable it. Of course they are a business and not charity, however, double standard is not good in business. As I said any other phone can tehter and no need for special setup except Iphone users.
  • PlayBook B.
    [...] premium for the right to tether, notably chasing down iPhone users and charging them an additional GBP£15 for the privilege. The argument from the operators is that the data pull from a PC / tablet is greater than that from [...]
  • PlayBook &.
    [...] premium for the right to tether, notably chasing down iPhone users and charging them an additional GBP£15 for the privilege. The argument from the operators is that the data pull from a PC / tablet is greater than that from [...]
  • Mr P.
    I've finished with the iPhone. I've had 3 of them right from the start. They are no longer that special. I've bought the Nexus S & it is the best move I've ever made. Bye Bye Apple, I can do what I want now, tethering, watch full size AVI files, NOT use iTunes (Hurrah!!), view Flash pages etc.. I am no longer a Sheep ;) Go for it, be brave.

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