Now that iOS 8.1 is out, with iOS 8.1 running on your iPhone, you can use your iPhone as a Instant Hotspot for your Mac (running Yosemite) and for your iPad or iPod Touch (also running iOS 8.1). This is one of the features of Continuity, which further integrates and connects your Mac and iOS devices. Continuity also includes Handoff, iPhone Cellular Calls, SMS Relay, and AirDrop.
When you are in an area with your Mac, iPad or iPod Touch that does not have Wi-Fi, they can connect to your phone’s personal hotspot when your iPhone is nearby. Now you do not even have to set up a personal hotspot on your iPhone and enter in the Wi-Fi Password for your personal hotspot. When you join the Wi-Fi network on your Mac, iPad or iPod Touch, the name of your phone will be listed automatically. All you have to do is join it. When you aren’t using your phone’s hotspot, your device will disconnect automatically to save battery life. Your device will remember the fact that you used your phone’s hotspot and the next time you want to go online when you do not have Wi-Fi, it automatically rejoins the hotspot.
For Instant Hotspot to work, you do need to have a 2012 or newer iMac, 2012 or newer MacBook Air, 2012 or newer MacBook Pro, 2012 or newer Mac Mini or late 2013 Mac Pro. You also need to have an iPhone or iPad running iOS 8.1 with a Lightning connector. The iPhone or iPad needs to have a cellular connection enabled that has mobile hotspot as part of the data plan. If you do not have a data plan that includes a mobile hotspot you would have to contact your carrier to add it on to your data plan and there may be additional fees for that. If your devices do not support Instant Hotspot, you can still tether your phone to your computer, iPad or iPod Touch by going into Settings and turning on Personal Hotspot on the phone. Then on your Mac and iOS device you would go to your Wi-Fi settings and join your mobile hotspot and enter in the Wi-Fi Password.
For Instant Hotspot to work, your devices need to be signed into the same iCloud account. If the whole family is using the same iCloud account it is a good idea to change the iCloud account to avoid confusion.
When using Instant Hotspot you do not need to enter in your mobile hotspot Wi-Fi password because it is set up so the devices are authorized through their iCloud account. The iPhone does not even need to be awake for this to work. To connect your Mac to your hotspot network, you click on the Wi-Fi symbol, the upside down pyramid in the upper right hand corner in the menu bar. Doing so, shows you the list of Wi-Fi networks that are available, as well as your Personal Hotspot and the signal strength of it. Selecting on your phone will automatically join the network, and you do not have to enter your password. On the Mac, the Wi-Fi symbol changes to two overlapping circles indicating that you are tethering.
To connect your iOS device to your hotspot, open up Settings and then select Wi-Fi. Doing so, shows you the list of Wi-Fi networks that are available, as well as your Personal Hotspot and the signal strength of it. Selecting on your phone will automatically join the network, and you do not have to enter your password.
The iPhone that you are using for your personal hotspot will even indicate that you are using it to connect your devices. On the lock screen, at the top of the screen there is a blue bar that goes across, with the tethering symbol of two overlapping circles. If your iPhone is being used to connect more than one device, it will be indicated above the tethering symbol. Also while using your iPhone there is a blue bar that goes across and in white letters it flashes displaying “Personal Hotspot: 1 Connection”.
That is how you set up and use Instant Hotspot.