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An iPhone application that would let the iPhone act as a computer modem was shot down by Apple (Nasdaq: AAPL) 
shortly after its launch. It was only available for a few minutes on the Apple App Store before it disappeared, but it was there was long enough to be noticed.
The application, NetShare by Nullriver Software, went on sale on iTunes Thursday night for US$9.99. Traces of the application lingered after it was taken down, and users searching frantically for it saw this cryptic message:
"The item you tried to buy is no longer available."
Now, according to the App Store, it no longer exists at all.
"We're trying to get a hold of Apple right now. Until we hear from Apple, it's hard to say what the real reason is, because, if it was AT&T (NYSE: T) , well, AT&T is not the iPhone service provider outside the U.S.," Maksim Rogov, a spokesperson for Nullriver Software, told MacNewsWorld.
Nullriver posted a short explanation and apology on the home page of its Web site, noting, "NetShare did not violate any of the developer or App Store agreements ... Sorry to all the folks that couldn't get it in time. We'll do our best to try to get the application back onto the App Store if at all possible. At the very least, we hope Apple will allow it to be used in countries where the provider does permit tethering."
So How Did It Work?
For years, users of some smartphones have been able to connect or "tether" their devices to laptops and use the phone's data plans and Internet access to provide Internet access to their PCs. It's just not done all that much, partly because WiFi has been widely available in most cities and partly because business users that typically have had smartphones also have had the budgets to simply buy dedicated wireless laptop cards and pay for the extra monthly Internet access service plans.
"NetShare is a SOCKS (sockets) proxy for the iPhone. It allows users access to the Internet on their computer through their iPhone while on the go. The connection is made over EDGE or 3G," Rogov said, adding that Nullriver isn't providing copies of the application via any other method -- and that Nullriver wants to get the issue sorted out with Apple.
Apple didn't respond to MacNewsWorld inquries by press time.
Does Apple Really Care?
It's likely that Apple itself doesn't object to tethering per se, but it must live up to the agreements it's made with exclusive carriers like AT&T, Andrew Brown, an analyst of wireless enterprise strategies for Strategy Analytics's global wireless practice, told MacNewsWorld.
"Apple wouldn't care, and I don't think Apple does care," he said. "At the same time, they have service agreements with the carriers that they need to abide by."
If pressure from AT&T is indeed behind NetShare's disappearance, it's not because the carrier is developing a tethering utility or extra service of its own.
"The iPhone is not intended to be used as a tethering device, and we have no plans to offer separate tethering plans for it," Wes Warnock, a spokesperson for AT&T, told MacNewsWorld.
"We offer LaptopConnect cards that you can use to access our wireless data network. Those cards offer typical download speeds as high as 1.7 Mbps (megabits per second)," he added.
The service plan for AT&T's LaptopConnect cards start at $60 per month.
What Gives?
Most carriers, Brown said, want to keep their customers compartmentalized, and they're reluctant to change their service plans in ways that could possibly cannibalize another service.
"To me, I don't see why it would cannibalize their business. I see it as an opportunity not to be missed," Brown said, noting that most 3G networks are probably running at only 20 to 30 percent capacity, which means there's little risk that carrier networks could be overloaded by iPhone usage.
Plus, the fine print in carrier contracts usually caps data usage at 500 MB or 1 GB -- even on so-called unlimited plans -- which would prevent customers from attempting to download things like movies, Brown said.
Only 9 to 11 percent of users with phones that are capable of tethering actually bother with tethering, according to Strategy Analytics research. Only a small demographic of tech-saavy users are even aware that the capability exists, Brown noted. "Most people don't tether, and they tend to let carriers lead them around by the nose," he said.
"You can use pretty much any of the mainstream smartphones as modems, so this does seem a little unfair that this is being done to Apple with the iPhone," Brown added.
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