How to enable WiFi Personal Hotspot or USB Tethering on an iPhone, easily sharing your Internet with nearby devices

These instructions will get you through the simple connection sharing process, with an accompanying video to also demonstrate how straight-forward and fast this is to set up. Jump to steps 1,2,3 below to read the step-by-step guide with screenshots, or jump to the walk through video at the end

Typical Use Cases:

Let’s suppose you have a shared data-plan on AT&T or Verizon, and you wish to share your connection out with other nearby devices, such as a WiFi-only iPad, Galaxy Nexus 7, a laptop running Windows 8, or even a Microsoft Surface RT (WiFi only). With shared data plans, you have all you need, with the capability already built into your phone. Your phone can become your rouiter. If you get any errors when trying to set up this Personal Hotspot feature, it's likely your chosen data plan doesn't allow this capability, consider contacting your cellular carrier to resolve.

It's easy!  But here's the caveats to consider:

• Watch your data usage!  (there's a free App for Verizon here and AT&T here, to help monitor data usage right from your iOS devices)
• On AT&T, you can take and place phone calls while sharing your data connection, but your far better speeds LTE coverage area is more limited.
• On Verizon, you can also take and place calls while sharing, but it'll automatically suspend all data stuff going on (on the iPhone, and on the devices it's sharing Internet with), up until the call ends. It'll then automatically let the network traffic flow again.

This is true on Verizon with the iPhone 5, even when you're blessed with wonderfully fast LTE (see what LTE can do for you on the go in this travel related article here. So you may want to workaround this shortcoming, using Skype, Google Voice, Ooma, or other VOIP apps. Some of these workarounds can be done on the iPhone, or even on the the connected computers, if handling voice calls while staying connected is your wish (I'll probably end up using Google Voice on the laptop, and a USB headset, for those rare occasions).

See also related article, When your home's Internet goes down, here's a cellular work-around.

CONFIGURATION INSTRUCTIONS:

1) Configure the iPhone, turning the Personal Hotspot function ON

On your iPhone, tap on Settings to get started, and just follow along:

Settings > General > Cellular > Personal Hotspot > On

When you turn on the Personal Hotspot, nothing will change visually on your iPhone until the first device is connected to the phone. You'll then easily notice the prominent, glowing blue status bar across the top. If you scroll down a bit, you’ll also see a nice description of all 3 connection options for this Personal Hotspot functionality, including USB cable, more commonly known as tethering:

2) Go ahead and connect nearby devices, using WiFi, Bluetooth, or USB cables

I've found I get excellent, nearly identical speed tests results in either the WiFi or USB modes. I'm using the 802.11n WiFi, then USB 2.0 to Lightning cable, for the video below. The cabled connection avoids any possible WiFi interference issues, and charges your iPhone as it shares out that cellular Internet.

You’ll continually be reminded that the Personal Hotspot mode is running, even from your lock screen, indicating how many connections are active (currently up to 10 are allowed):

3) Now remember to turn "Personal Hotspot" off when you're done sharing!

This status bar is good, as it helps with remembering to tap on the blue status bar across the top, and toggle “Personal Hotspot” back to Off, when you're all done sharing. But if your devices are turned off first, the iPhone device won't show the status bar across the top. So you should probably get in the habit of turning off this Hotspot feature as soon as you are done, to avoid broadcasting your WiFi device's name over WiFi unnecessarily. Or just wait a while, as it may actually just turn itself off.

Sources:

www.gottabemobile.com/2012/09/19/how-to-use-personal-hotspot-on-ios-6-and-the-iphone-5

Video walk through, showing both a WiFi connection to a Windows 8 laptop, and a wired USB connection:

Mar. 03 2013 Update:
Say you're at a secure location, where guests are not permitted to light up Bluetooth or Wi-Fi. This will still work out, just open the 'Settings' app, turn off 'Wi-Fi' and 'Bluetooth', then turn on the Personal Hotspot function. It'll say USB only. That's it, you're online over 3G or LTE only, with no unneccessary emissions. But you need to remember to turn 'Wi-Fi' and 'Bluetooth' back on, after you head back out of that location. Sure wish I had this capability a few years back, when I traveled to many secure locations, where guest Wi-Fi joining and/or providing, was absolutely forbidden.

Jul. 07 2013 Update:
If you get the following message in your Event Viewer, System log

The system detected an address conflict for IP address :: with the system having network hardware address 00-00-00-00-00-00. Network operations on this system may be disrupted as a result.

and you see this pop-up

it seems you can simply click close and ignore it, because it's just an IPv6 issue, and has no apparent side effects to leave it as-is. But it is a bit annoying, so you might consider trying the workaround here (that I haven't tested).