As Engadget points out, you can still see tethering apps like PDANet in the Android Market, but if you try to install them on any of the major U.S. carriers besides Sprint, you’ll be told that “This item is not available on your carrier.”

T-Mobile has blocked illicit tethering apps for more than two years, but the action from Verizon Wireless and AT&T is a new development, albeit an unsurprising one. Wireless carriers charge $15 to $20 per month to use smartphones as portable modems for tablets and PCs, so either they just noticed that users were able to dodge the extra charges, or they finally got Google to play along.

Free tethering will still be possible by sideloading apps from outside the Android Market, but that’s not quite as convenient as an app from within the store. It’s also of no consolation to AT&T users, who can’t sideload apps at all without rooting their phones. (AT&T, meanwhile, has been sniffing out tethering on its own. Back in March, the carrier started sending warning letters to illicit tethering users, both on iPhone and Android.)

I’m still hoping for carriers to render this issue moot by offering capped bandwidth plans with tethering included across all devices. With this sweeping action to protect higher-priced data plans, something tells me it’s not happening any time soon.

Verizon users get 2GB of data to use for tethering: AT&T will also give its own users 2GB for the same price. In both cases, the data used in tethering applications is separate from the data used on the phone itself — meaning if you go over on either, you’ll be socked with overage charges in either case.

At least AT&T finally realized it’s not right to take your tethering data out of your regular data plan, yet still charge you an additional fee. Maybe it’s just me, but that seemed like highway robbery. In any case, AT&T’s announcement is sure to begin the debate on whether or not the user has a right to use the data they pay for in the manner they want.

[UPDATE: AT&T has contacted us to clarify: "AT&T counts data used in tethering applications and data used on the phone together," spokesperson Steve Kerns told us. "So a 2GB tethering plan and a 2GB phone data plan would provide 4GB of data that customers can use on the phone or through hotspot use."]

Currently, AT&T charges $20 per month for tethering on top of its $25 per month smartphone data plan. But AT&T doesn’t provide any extra data for this service, so subscribers are confined to the same 2 GB per month for which they’re already paying.

That’ll change starting February 13, when AT&T starts selling phones equipped with Wi-Fi hotspot capabilities. Both wireless and USB tethering will extend users’ bandwidth caps to 4 GB per month for the same $20 surcharge as before.  Each additional GB cost $10.

Despite chatter, AT&T didn’t say whether the iPhone will get a wireless hotspot app to match the Verizon iPhone., but an AT&T spokesman told Wired that the carrier is working with Apple on it. The Verizon iPhone’s wireless hotspot feature is priced a bit differently because the basic smartphone service includes unlimited data (for now). It costs $20 per month for 2 GB of dedicated wireless tethering data, plus $20 per additional GB.

iPhones aside, AT&T’s first phone equipped with a hotspot will be HTC’s Inspire 4G, an Android 2.2 phone with a 4.3-inch screen.

I’m glad to see AT&T will no longer double-dip with a tethering plan that provides no extra bandwidth, though I’d be happier if the carrier allowed free tethering for customers who don’t need the additional 2GB. I’m grandfathered into unlimited data now, but for free tethering I’d hop onto metered billing in a heartbeat.

MacRumors is one of several sites to publish screenshots of a new option within the Network section of iPhone’s settings which seem to suggest tethering will finally be a reality. Tapping “Set Up Internet Tethering” pops up a message stating that customers can either call or visit AT&T’s website in order to set up the feature.

Gregg Keizer at Computerworld contacted AT&T to ask about the status of tethering, but got nothing more than the that company had “nothing new” to share. Confusing, if you ask me. Why can’t the carrier just come clean on its plans? We’ve only been waiting for a year now, no?

It’s not like AT&T doesn’t do tethering at all–if you have a Blackberry, you can add the functionality to your plan for an extra $30 per month.

I also assumed that “soon” meant a matter of weeks or a month or two, so it was startling when Apple announced that iPhone OS 3.0 would support tethering seven months later and named 22 carriers who would be ready on day of launch–and AT&T was not among them. The carrier merely said that it would support tethering at some unspecified date–which turned out not to be early August. Most recently it’s said that it needs to upgrade its network and that “We expect to offer tethering in the future,” which falls short of a promise that it will ever do so.

All along, of course, some folks have tethered their iPhones via hacks, software  that runs only on jailbroken iPhones, and even a program that was very briefly available on Apple’s App Store. But they’ve risked the wrath of AT&T, since tethering violates the carrier’s current terms of service.

As far as I know, nobody at AT&T has publicly explained what its president was doing whipping up excitement for tethering when allowing it without time-consuming infrastructure improvements would have been imprudent. But it seems likely that it now wants to go to extreme measures not to get anyone’s hopes up until it’s absolutely, positively sure that tethering is ready to go. I hope that day comes soon.

But I also keep asking myself an ugly question: If the company still seems to be having trouble dealing with the quantity of data being consumed by iPhone users who can’t tether, what does that say about the chances that it’ll allow them to hog even more bandwidth via their laptops anytime soon?

Yesterday, the company said that MMS for the iPhone was finally coming on September 25th. But its intentions about tethering are vaguer than ever–it isn’t promising a darn thing:

As for tethering, by its nature, this function could exponentially increase traffic on the network, and we need to ensure that some of our current upgrades are in place before we can deliver the expanded functionality with the excellent performance that customers expect. We expect to offer tethering in the future.

Fair enough, I suppose–except for the part about the company president telling customers and prospective customers that tethering was almost in place ten months ago. I wonder how many people plunked down money for an iPhone based in part on the not-unreasonable belief that “soon” meant…soon?