John Paczkowski

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AT&T Tethering Option Spotted in Latest iPhone Beta

It has been nearly a year since Apple announced Internet tethering for the iPhone and it now seems that AT&T may finally be ready to support it.

Apple (AAPL) last night released a new beta of the iPhone 4.0 OS featuring a “set up tethering” option in the Network Settings menu. Tap it and a panel appears directing users either to call AT&T or visit the carrier’s Web site to activate the feature.

Has AT&T (T) overcome its anxiety about the long-promised feature, which it feared might exponentially increase network traffic and undermine sales of air cards? Certainly appears that way, though it’s worth noting that the carrier was still managing expectations for tethering as recently as last month. Asked in April about the feature’s status by Engadget, AT&T hinted at further delays by trotting out its now standard we’re-worried-about-network-performance-issues excuse:

“We understand that there is great interest in tethering but cannot provide any details at this time,” the company said.

“We know that iPhone users love their devices and mobile broadband, and that they’re likely to embrace tethering just as they have other features and apps–by using it a lot. iPhone tethering has the potential to exponentially increase traffic, and we need to ensure that we’re able to deliver excellent performance for the feature–over and above the increases in data traffic we’re already seeing–before we will offer the feature.”

Of course, AT&T has been pumping a lot of money into wireless network and back-haul improvements this year, so perhaps it has reached performance targets. Certainly, the inclusion of an AT&T tethering menu in the latest iPhone OS beta suggests as much. Still, it is a beta, not a gold release, and there’s always a chance it could be de-featured prior to its official debut.