To enable Tethering on iPhone, you need to first jailbreak your iPhone, then unlock it and finally you have to install the tethering and internet settings. We have already covered about Blacksn0w Released via Blackra1n RC3 to Unlock iPhone 3G and 3GS With 05.11.07 Baseband.

Once you had downloaded Blackra1n RC3 you can follow the below jailbreaking guides based on your Operating System.

Procedure to Jailbreak iPhone and iPod Touch With 3.1.2 Firmware Using blackra1n RC3 for Mac
Procedure to Jailbreak iPhone and iPod Touch on 3.1.2 Firmware With blackra1n RC3 for Windows

After you are done with jailbreaking your iPhone you can unlock it by reading the following guide.

How to Unlock iPhone 3GS and 3G With 3.1.2 Firmware and 05.11.07 Baseband Using blacksn0w

After you have successfully unlocked your iPhone go directly to Internet and Tethering settings part (Step 6). But if you are confused with the above process start from the Step 1.

• Step 1 : Download BlackRa1n RC3 based on your OS either Mac or PC – http://blackra1n.com/
• Step 2 : Plug in your iPhone to the computer and Run BlackRa1n RC3
• Step 3 : Click the “Make it ra1n” button to jailbreak your iPhone which will take less than 60 seconds.
• Step 4 : Once your iPhone is now jailbroken, find Blackra1n icon on your iPhone’s home screen and open the Blackra1n app.
• Step 5 : Click the “sn0w” link from the available set of packages and hit the Install button in the upper right. This will install blacksn0w and unlocks your phone to use with any SIM. This also re-enables the IPCC hack required to enable tethering.
• Step 6 : Open Safari browser and open http://help.benm.at, Scroll down and click “Mobileconfigs”
• Step 7 : Find the IPCC file for your carrier and then hit the “Install” button. Confirm the resulting prompt which alerts you that the file has not been signed.
• Step 8 : Now hold the sleep and home button until your iPhone resets.
• Step 9 : Once your iPhone resets, go to Settings > General > Network > Internet Tethering and switch the “Internet Tethering” slider to “On”.
• Step 10 : There is no Step 10 just enjoy with your iPhone’s Internet Connection.