This feature was available in the CDMA version of the iPhone and will let the device act as a WiFi access point to up to 5 devices. This is definitely a good to have feature, but a report from Ina Fried (All Things Digital) questions the usage of this feature in CDMA device.
HotSpot capability is more like wireless tethering. Instead of having a cable and connecting to a laptop / desktop, this feature makes the device to be a wireless access point for up to 5 devices. Unlike GSM technology that can transmit Voice and Data simultaneously, CDMA in its current form has the limitation that it cannot transmit them simultaneously. This means that if I open my CDMA phone to be a HotSpot, then the connection will last when I don't have voice transmission. The moment I receive or make calls, the connection will be suspended / terminated.
This makes the HotSpot feature on CDMA phones of this generation an extended emergency feature and not that much a reliable or practical application. It will still be better to carry those exclusive MiFi devices from Verizon that allows you to do the same, in an uninterrupted fashion.
In the mean time the recent news articles around the blogs indicate that the next version of iOS (4.3) has inherent HotSpot support across carriers. It is up-to the carriers to allow the usage of it or not. We all remember the fuzz that AT&T had around tethering, so this one is going to be a wait and watch scenario.
Author: Vinod
Source: All Things Digital
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