Bluetooth tether iPad to iPhone in iOS 4.3 without jailbreak
Came across this undocumented feature of the new iOS 4.3 update for iPad and iPhones and seems that now you can use the new Personal Hotspot feature in iOS 4.3 for iPhone 4 [Update: turns out it works with iPhone 3G and iPhone 3GS on iOS versions less than 4.3] to tether the iPad to the iPhone via Bluetooth for Internet connectivity.
Previously the only way to achieve this is to jailbreak the iPad and purchase an app on Cydia called iTether.
I assume that Apple enabled Bluetooth tethering on the iPad as it is in effect no different to the Wifi tethering offered by the new Personal Hotspot feature in iOS 4.3 (assuming the carrier allows it and additional charges may apply).
Here in Australia, I'm with the carrier Optus which allows tethering of my included 2Gb per month data at no additional cost which is a bonus and I don't ever come close to using up my included data. Even though I have a Wifi + 3G iPad (1st Gen), I hardly use the 3G function and only use prepaid data for when I really need it, so this new feature is a real bonus as the price is right! Free! ;)
Steps to setup iPad to iPhone bluetooth tethering are:
1) On iPhone 4: Turn on Personal Hotspot (Settings -> Personal Hotspot -> On)
2) On iPad: Go to Bluetooth Settings (Settings-> General -> Bluetooth)
3) On iPad: Select iPhone to pair with, and confirm pairing on both iPad and iPhone
4) Enjoy Bluetooth tethering! :)
Notice the new tethering icon next to the iPad label at the top left of the iPad screen...
Note: to disable just turn off Personal Hotspot on iPhone 4, and to re-enable turn on Personal Hotspot on iphone 4 and manually pair via Bluetooth on iPad (Settings -> General -> Bluetooth -> <select iPhone name>)
Why Bluetooth tethering over Wifi tethering? Better battery life and iPhone doesn't heat up so much (Apple was apt in naming it Personal *hot*spot :P). Down side is that it does not connect automagically from iPad to iPhone when you turn on Personal Hotspot as is the case if you configured Wifi tethering, but not a big trade off for longer battery life...
So if you're in the market for a new iPad 2 and already have an iPhone 4, then unless you really need the GPS, I reckon go for the Wifi only version and save some money to put towards future Apple purchases...;)
Disclaimer: seeing the iPad 2 is not yet released at the time of writing this post, I'm only assuming that this will work on the iPad 2, so don't just take my word for it. If anyone has one and can confirm that this will work, let me know... (Or if someone wants to buy me one to try, I'll report the findings in return... :P)
Update: Turns out you don't need an iPhone 4 for this to work... I tested it on my old iPhone 3G (which you can't load iOS 4.3 on), and if you turn on Internet Tethering (prior to iOS 4.3) instead of Personal Hotspot in iOS 4.3, and pair the iPad and iPhone 3G, bluetooth tethering will also work, so seems like only the iPad needs to have iOS 4.3. I'm assuming that the iPhone 3GS will also work in a similar way...
Update 2: If you get this to work can you please post in the comments below what version of iPhone and what iOS version you are running? Would be good to know so that others can verify if their current hardware/firmware works using this Bluetooth tethering method. Thanks in advance! :)
Update 3: Some people have issues pairing the iPad to the iPhone, especially iPhone 3G on 4.2.1, so if it doesn't work at first, just keep trying. I did some testing on my old iPhone 3G on 4.2.1 and iPad (1st Gen Wifi and 3G) and initially got the error that the iPad is not supported on the iPhone and the iPad keeps asking if the iPhone is on and close by. After a few attempts it finally worked. Also make sure that you enable tethering first (as per the steps above) before attempting to pair, otherwise it just won't work regardless of number of tries. Hope that helps out some people with similar issues.
Update 4: Tested it out with iOS5 on both iPhone and iPad and this still works. Different combinations of iOS between iPhone and iPad also continue to work so if it doesn't work, do continue to post your experiences in the comments and I'll try and help out with options where possible.