Tethering bundled in on Optus' $99 iPhone plan

Optus has announced it will offer the 32Gb model of the iPhone 3G S on a $99 per month 'timeless' plan, which includes unlimited calls and SMS within Australia and a 1.5Gb data allowance.

The 24-month plan will include free tethering for the life of the contract, and Optus will also waive the $14.95 'Mobile Internet Pack' it usually offers to add data access to its 'Timeless' plans.

Tethering refers to the ability to use the 3G iPhone as a modem to provide broadband connectivity to a laptop computer. On cheaper plans, Optus has announced it will charge a controversial $9.95 per month fee to switch the capability on.

The new iPhone will be available on a series of plans, but Optus is focusing its marketing around the $99 per month plan.

Michael Smith, managing director of Optus' consumer business said customers are looking for 'surety' from their mobile plans.

At a launch event this morning in Sydney, Smith told journalists the carrier will soon offer customers the ability to buy the iPhone outright (on pre-paid plans), but won't announce these details for several weeks.

It is "important to focus on the ultimate package", he said, rather than encourage users to buy the devices outright. "The $99 plan is a nice spot in the market for the customers coming to this category."

Some Optus iPhone customers have reported monstrous bills after not realising just how much data the iPhone is capable of chewing through.

"I don't understand why people get $3000 phone bills," Smith said at the event. "Most people just want a phone that works and they want [the carrier] to get the bill right."

The $99 Timeless package provides some of that billing certainty, he said.

Tethering charges

Smith said Apple estimates the take-up of tethering to be in the "high single digit percentages".

But Optus is erring on the side of caution, acknowledging the potential for tethering to cause some strain on mobile networks.

"The way Apple does this is so intuitive, people will get [the tethering concept]," Smith said. "Nobody could have expected how popular downloading apps would be, but look what happened.

"The tethering charge allows us to make sure we have sufficient funds to invest in our network," he said.

Smith admitted that when the first iPhone was released, Optus experienced "demands" on its mobile networks it didn't expect.

"We had the lion's share of iPhone customers in this country," he said, "and we told them to go use the data."

Optus has invested to improve its mobile network, he said. "But I wouldn't claim we've completed that journey yet."

Smith said Optus is aware that some users have found workarounds to the tethering locks on their iPhones.

"We're aware of it, and we have had some discussions with Apple who are working with us to make sure this will be fixed," he said.

Smith said Optus has no fear that tethering will cannibalise the market for its mobile broadband products, which are usually sold as USB dongles.

"We don't care," he said. "From our perspective it doesn't matter whether you use a dongle or the handset to gain access to the data. It's all business to us."

More announcements coming

The iPhone 3G S, which offers increased speeds and video, goes on sale Friday in Australia.

Optus claims to have received 40,000 pre-registrations for the device. "We only expected 5,000," Smith said.

"Will there still be a fever pitch around this iPhone? The answer is clearly yes."

That said, he does not expect long queues on Friday, nor any stock shortages.

"We do expect some buzz at retail level, but maybe not at the level we had last year," he said.

Optus is expected to announce upgrade plans for existing iPhone users in the coming weeks.