Tethering has been around for the G1 since it hit the market, but it always required gaining root access to the OS by loading hacked-up version of the firmware. From what I’ve read, the process is fairly painless, and there are few reports of bricking. But, once you’ve rooted your phone, you’d have to load up the software and make changes to SOCKS proxy settings in your browser to connect through the phone.
I’ve been very interested in the idea of using my phone as a modem in a pinch, but I never liked the idea of rooting my phone and dealing with the manual updating and vices that come with it (I’m not a developer, so there’s not a huge benefit). However, there’s a new freeware app, PdaNet, that sets up your USB-connected G1 as a tethered modem using the WiFi or cellular connection on the phone. PdaNet has already done the job for BlackBerry, Palm OS, Windows Mobile, iPhone, and now, it’s been ported to Android (for G1 only, for now).
The Android version of PdaNet is considered a “preview release” right now. It only allows for connection through the USB, while, for example, the iPhone version can be set up to join a wireless ad-hoc network and others connect via Bluetooth. Though, if you know what you’re doing, you could set up the computer that’s connected to the G1 to share the Internet connection across to the WiFi connection in the computer which is joined to an ad-hoc, effectively using the computer as a router and wireless access point of sorts, with the G1 as a modem.
I was very skeptical of the software; very skeptical that it wouldn’t work as advertised. But, sure enough, it installed without a hitch and the connection was made without a fuss from neither phone nor laptop. There’s even a 64-bit version, but I haven’t tried that one yet.
Just be careful not to violate any terms of service you may have, or go over T-Mobile’s “unlimited” 5GB cap! Word on the street is, though, that T-Mobile will not block tethering, and the 5GB cap is a “soft” cap, meaning, once you hit the cap, they’ll throttle your speed down below edge speeds. Of course, none of this counts if you’re connected via WiFi, but in that case, why are you tethering??