Free tethering on iPhone with jailbroken IOS 4.0.1 and Ubuntu Linux. That is also possible on windows with putty.
I. Preparing the operation, setup of the necessary programs
1. Install openSSH with cydia then reboot the iPhone
2. Install sshfs to browse all the iphone files easily (sudo apt-get install sshfs)
3. Download the fixed terminal (step not necessary)
http://code.google.com/p/mobileterminal/downloads/list which is useful for changing the default password right on the iphone.
4. Get the iphone address in the wifi settings
(let's say it is 192.168.0.101)
5. Using sshfs, mount the iPhone filesystem :
mkdir myiphone && sshfs root@192.168.0.101:/ myiphone
6. Copy the unziped Terminal application in
/var/stash/Applications folder of the iPhone filesystem then reboot the iPhone
7. Change the default password (alpine). See : http://iphoneoverdose.com/2008/how-to-change-the-default-alpine-ssh-password-on-your-iphone/
II. Tether now!
1. Create an AdHoc connection on Ubuntu with the following parameters:
security 40/128 bit key (That is the maximal security setting I was able to set)
ipv4 : link-local only
2. Connect Ubuntu to that connection
3. Connect the iphone to the Ad Hoc connection
4. On the iPhone open a new safari page then return to the settings to note the ip address
5. On Ubuntu, open the terminal then enter : ssh -ND 9999 root@192.168.0.101
6. On Ubuntu open firefox then fill in the iPhone's IP address (which you memorized earlier) into the SOCKS Host field, and put 1080 as the port number. Make sure all other proxy fields are blank.
7. The proxy (the iphone) doesn't forward DNS, you will also have to change an advanced option in Firefox. In the Firefox URL bar, enter "about:config"In Filter, type "socks" and then double-click "network.proxy.socks_remote_dns" to make its value "true".
That's all! Viva Internet everywhere!
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