This quick guide shows you how to tether your iPhone with your laptop using the USB cable to use the iPhone’s 3G internet connection. Once it is configured, getting connected is fast, as is the internet connection. You can also use any application without configuring the proxy settings for the apps.
A simple test on www.speedtest.net gives the results below.
When I’m in an area with better 3G coverage it’s even faster!

Note: This works on Windows and requires iTunes to be installed. If you find a better alternative to anything in this guide please leave a comment and let me know.

Prepare your iPhone

1. Jailbreak your iPhone: Use Quickpwn or winpwn. I prefer Quickpwn.
2. Launch Cydia and Install openSSH. The default username is root. The default password is alpine. Make sure you change the default password.
3. This step is optional. Install BossPrefs from Cydia. This will allow you to toggle SSH on and off.

Prepare your laptop

1. Install the iPhone Tunnel Suite http://www.makkiaweb.net/itunnel/. Go to the install directory, the default is C:\Program Files\iPhone Tunnel Suite\iTunnel, and create a shortcut to iTunnel.exeshortcut and place it on your desktop.

   You will need to add two arguments to the shortcut. Your shortcut should look like this:

   "C:\Program Files\iPhone Tunnel Suite\iTunnel\iTunnel.exe" 22 22

2. Download Putty and place it in your C:\windows directory
3. Create a text file on your desktop named iPhone.bat. This will create an SSH tunnel to the iPhone. In the iPhone.bat file, type

   start putty -D 8080 -P 22 -ssh 127.0.0.1 -l root -pw YourPassword

4. Install Proxifier from proxifier.com. Proxifier routes all of the network traffic through the proxy you specifiy (which will be our iPhone). It also makes it convenient for us since we can just launch this application and then start using the iPhone as a proxy without configuring each application we want to use. If you don’t want to use Proxifier, then you have to configure each application to use the proxy, how tedious! To configure Proxifier:
1. Open Proxifier
2. Go to Options –> Proxy Settings. Click the “Add” button and enter the following:
1. Address: 127.0.0.1
2. Port: 8080
3. Protocol: SOCKS Version 5
   
3. Go to Options –> Name Resolution. Click “Remotely”
   

Use the connection on your laptop

1. Connect your laptop and iPhone with the USB cable.
2. If you installed BossPrefs, make sure SSH is turned on.
3. Run the iTunnel shortcut on your desktop.
4. Run the iPhone.bat file on your desktop. This will open putty and create an SSH session to the iPhone.
5. Launch Proxifier.
6. On the iPhone make sure you browse to a website within Safari to activate the 3G connection.
7. Start browsing on your laptop.