AT&T announced they are going to have Personal Hotspot support released March 11 alongside the iOS 4.3 release. The tethering option for iPhone has been available through AT&T since the launch of the iPhone 4 back in June 2010. Now in 2011 with the release of iPhone 5 just around the corner, we are going to now get an option called Personal Hotspot. So what is the difference you ask:
Tethering: The use of your iPhone as a modem for another device, usually a notebook or PDA. The connection is made either with a cable (USB or serial) or wirelessly through bluetooth.
Tethering enables users to go online from their laptops or PDAs in situations where there’s no other means of Internet access: when there’s no wi-fi hotspot around, for example, or your cable modem goes on the fritz, or you’re on a dirt road in the middle of nowhere and need an online map quick … you get the idea.
If you’re already paying for data service on your cell phone and your cellular provider doesn’t require any extra fees for using your cell phone as a modem for your laptop, tethering can also save you money, since you won’t have to pay for separate mobile broadband service or buy additional hardware just to get your laptop connected.
You can also surf the web more securely using a tethered cell phone, because your information is being sent directly through the phone versus, for example, over a public open wireless hotspot.
You may also conserve some laptop battery power, because you can turn off wi-fi on your laptop while you use your tethered cellular modem.
Personal Hotspot: The personal hotspot feature on the iPhone provides a way to share an Internet connection with other devices. If you are familiar with WiFi access points, the personal hotspot software basically turns a smartphone into a WiFi access point. You may have also heard of MiFis, which are basically the same as a personal hotspot except that they are dedicated to sharing Internet access, where as a smartphone has multiple functions, including send and receiving phone calls.
The benefit of a personal hotspot is that it enables Internet sharing using the nearly ubiquitous WiFi wireless technology. Any device that has a WiFi radio can access a personal hotspot, once it is configured. There are, however, some constraints with personal hotspots that don’t exist with WiFi access points.
All personal hotspots and MiFis limit the number of simultaneous connections that it supports, and usually that number is five devices. There are a number of reasons for this constraint, ranging from performance to the fact that the carriers want to limit the number of devices that use the same connection to their network.
So basically tethering is hardwired from the iPhone to the device (laptop) and Personal Hotspot is a wireless connection from the iPhone to the device (laptop).