Unlocked iPhone using a Docomo Xi LTE SIM card to avoid tethering charges

Update: confirmed at a Docomo shop that a FOMA contract can indeed be converted to a Xi plan, but beware that if you go back to FOMA, you'll pay more for the monthly base fee because the phone is now an "old" phone starting service - it won't be eligible for the "value" plan for "new" phones, only the "basic" plan.

Docomo "Xi" 3.9G LTE microSIM card

A Shukan Ascii article has a detailed description [J] on using an iPhone 4S on Docomo now that Xi micro SIMs are available. Keep in mind that this should work for any phone that supports UMTS-2100, Docomo's primary band.

Previously this was prohibitively expensive because Docomo would automatically levy a tethering charge on all unlocked phones that use 3G "FOMA" service (except the SBM 008Z). However, tethering is ostensibly allowed on Docomo's 3.9G "Xi" LTE because data usage is capped. A non-LTE phone with a Xi SIM card will connect to the FOMA network, so we now have a reasonable option for non-Docomo branded smartphones.

Cost

See here and here for a more detailed explanation.
Compared to AU and SBM, this will be more expensive. With a 2-year contract, the standard voice plan is ¥780, but this includes no talk time. 24 hour free calls to Docomo subscribers costs an additional ¥700. Currently, data is cheap, only ¥4,410, but from 5/1/2012, this will increase to ¥5,985.

Monthly price with 2-year contract

	Until 4/30/2012	From 5/1/2012
Voice	¥700	¥700
Data	¥4,410	¥5,985
ISP charge	¥525	¥525
Universal service charge	¥7	¥7
Talk 24 (optional)	¥700	¥700
Total	¥6,432 (5,723)	¥7,998 (7,298)

Data Cap

Currently, exceeding 7GB apparently results in a speed reduction to 128 kbps, though has been a point of confusion. From 10/2012, there will be an option to purchase an additional 2GB for ¥2,625.

なお、Xiデータ通信専用プランについては、お客様により安心してお使いいただけるよう、既存のXiデータプランも含めて、全て、7GBを超える通信は自動で送受信時最大128kbps1 とさせていただき、追加料金不要で引き続きご利用いただけるようにいたします。
2012年10月1日からは、お申し出いただいたお客様については、2GBのご利用ごとに2,625円をお支払いいただくことで、7GBを超えた通信でも、受信時最大75Mbps1 の通信速度でご利用できるようにいたします。
なお、2012年9月30日までは、7GBを超えても速度変更は行わず、追加料金不要とさせていただくため、気軽にご利用いただけます

Source.

Starting Xi Service

Actually getting in and out with the SIM could be a hassle, depending on the quality of the staff you speak to.

First, Docomo does indeed sell ala carte SIM cards for unlocked phones, and it is my understanding that you don't need to actually bring in the phone, which would be a good idea if your phone doesn't display the MIC certification mark. (Unfortunately, some properly certified phones weren't stamped by the manufacturers, like the Nexus One.) Just tell them you are using an unlocked iPhone 4S but don't have it with you. (If you are using an unlocked iPhone 4 or 4S, you can take it in, no problem.)

Next, because Docomo decided to invent names for it's SIM cards, make sure you have your terminology correct. The Xi SIM cards are RED (see image at top) and called ドコモUIMカード AX04 (Docomo UIM Card) for the full size SIM, and ドコモminiUIMカード AX04m for the microSIM.

The staff may be confused as to why you want to use get Xi service when you don't have an LTE phone. Some may even try and tell you that it would be cheaper to get FOMA service. Be firm and patient and insist on Xi. If you're not making any progress, leave, go to another store, and try again. Whatever you do, don't get a WHITE SIM CARD!

Docomo FOMA 3G microSIM card

Thanks to Sven.