The version of iOS spotted on the Verizon iPhone at Verizon's iPhone announcement was iOS 4.2.5. While the iPhone allows tethering by cable or Bluetooth, Verizon's mobile hotspot feature is more versatile, allowing up to 5 devices to be connected to what appears to the devices to be a wi-fi network.
The report originally came from iPhoneHellas.gr, which correctly predicted the release date of iOS 4.0.1, and in 2008, the release of iOS 2.2.
Verizon's mobile hotspot service allocates 2GB of data for use by end users. It does so while still allowing unlimited smartphone data, by accounting for the data transferred in a "different bucket." AT&T, if this come to fruition, would probably use the same system, particularly since the iPhone on AT&T is limited to 2GB of data overall.
