As reported by iPhoneHellas.gr, (via Google Translate), the feature will be part of a purported update in the works known as iOS 4.3. The rumor was credited to "reliable information" obtained by the site.
The Personal Hotspot feature is included in a new version of iOS, dubbed 4.2.5, that was spotted on pre-release CDMA iPhone hardware shown off at Tuesday's Verizon iPhone press conference. The feature is found in the Settings application on the phone, where it can be turned on or off and the Wi-Fi password can be changed.
In addition, on Tuesday iPhoneclub.nl (via Google Translate) also reported that the iOS 4.3 update will only support the mobile hotspot feature, which allows up to five devices to be connected to a 3G data connection over Wi-Fi, will only be available if a carrier offers it.
AT&T famously did not allow tethering on the iPhone in the U.S. even after Apple had added the ability to share a wireless Internet connection via USB or Bluetooth to its mobile operating system. The feature eventually arrived last June alongside new, capped data plans. Tethering with an iPhone on AT&T costs an extra $20 per month.
When asked by AppleInsider on Tuesday whether AT&T will offer the Personal Hotspot feature on its network, a company spokesperson said they wouldn't "speculate" on potential future features. Apple has not made any mention of the Personal Hotspot coming to existing iPhones since the feature was first revealed on Tuesday.
The last time a supposed iOS 4.3 was mentioned was in November, when it was suggested the software update could add recurring application subscriptions with software on the App Store. Such a feature could allow iPad users to pay to subscribe to a regularly updated publication, like a newspaper or magazine.