I travel quite a bit, and I have found that the “tethering & portable hotspot” facility in Android 2.2 is just absolutely wonderful. It has saved me considerable money and got me reasonably-good connectivity in places I wouldn’t otherwise have had it; I’m looking at you, big-name US hotel chains.
When I heard that telephone companies were charging extra for this, I couldn’t figure out how they were doing it; without considerable deep-packet inspection, how can you tell that there are other computers gatewaying through my Nexus One, which in fact seems to hotspot just fine on certain networks that are said to charge extra? The answer is obvious but only once you see it: the network operators modify Android on the locked phones they sell cheap along with a contract (perfectly legal, it’s open-source) to remove the built-in tethering/hotspot option, and replace it with one of their own, which they charge for.
I’m not going to weigh in on the pros and cons of the business model, because I have no insight into telco cost structures or indeed what would happen if tethering became free for everyone. There’s no doubt that for some of us it’s a major value-add and it doesn’t seem unreasonable to pay a little extra for it. I paid a few bucks a month for Boingo until I got this going, and that seemed fair.
However, I will point out that for people who travel a lot, an unlocked phone (in the range of $500 for most decent Android devices) might end up looking cheap.
Further practical advice: plug that puppy in if you’re going to be doing this for more than a few minutes, because that WiFi radio seems to eat watts in hotspot mode. And don’t stick it in your pocket; the Nexus One, at least, runs way hot when plugged-in and tethering.