Your ISP can detect when your phone is used for tethering, and not all of them allow it. That said, this is the first I've heard that some of them might charge different rates, or attach different conditions, to this kind of data usage. Basically, from the above anecdote, they appear to be saying: "use as much data as you like on the phone itself (where, practically speaking, you'll never be able to use up your allowance) but we won't allow scenarios where you might actually make more effective use of it". Scandalous -- except nothing shocks me about ISPs anymore.
P.S. Why is Dublin City Council like an ISP? ... because their fair usage policy only allows three gigs. ;-/