Since the release of iPhone OS 4, Apple has added a new feature in iPhone called Personal Hotspot. (Previously, iPhone only used to allow to tether (share Internet) using USB cable). This feature can be accessed from Settings >> Personal Hotspot (usually under the Wi-Fi button) and it can also be accessed via Settings >> General >> Network >> Personal Hotspot.
> Personal Hotspot" src="/images/stories/personalhotspot1.jpg" alt="Personal Hotspot" width="150" height="226" />> General >> Network >> Personal Hotspot" src="/images/stories/personalhotspot2.jpg" alt="Personal Hotspot" width="150" height="226" />
There are two ways of sharing the Internet (3G network) connection on the iPhone with other devices, such as iPad or any laptops, etc. One is via USB cable and other is making the iPhone as a Wi-Fi (wifi hotspot) access point (hotspots). The options for these two will be popped up when you switch ON the Personal Hotspot option. If you like to make your iPhone as a Wi-Fi hotspot (Wireless Internet, wifi hotspot) for your Wi-Fi enabled devices such as iPad, you can use the option "Turn on Wi-Fi and Bluetooth". Your iPhone becomes a Wi-Fi access point when you do so, that the other Wi-Fi enabled devices can detect this connection and connect to Internet. The other option is via USB cable, which is good if you are tethering this connection with a laptop or a PC.
The password for the Wi-Fi network is given in the Personal Hotspot settings page. You can change this password from the Personal Hotspot settings screen. It is important to protect this because when you turn on your iPhone as a hotspot in a public area, others can connect to your network if you don't have a password.
The good thing about this feature is that, if you have a Wi-Fi only iPad (as you may know, there are 2 types of iPad, 1) Only 3G, 2) Wi-Fi + 3G), you do not need to sign up for another 3G connection or wait to reach in a Wi-Fi spot (Wireless Internet) to use your iPad to stream YouTube or check out other stuffs on Internet, just turn on your iPhone as a Hotspot.
Let me know if you have any questions or comments, post it in the comment section, under thi article.