Ok. Here ya go. Here is a forum thread explaining that you do need a plan with 
at&t or now vz and sprint to teather and  create the hotspot. Since I'm on an 
unlimited plan I am disqualified from doing this.

Ok link follows.

https://discussions.apple.com/thread/2777170?start=0&tstart=0
On Oct 17, 2011, at 8:35 AM, Gordon Smith wrote:

> Sarah
> 
> My understanding is that that is no longer necessary.
> 
> Gordon
> 
> On 17 Oct 2011, at 16:33, Sarah Alawami wrote:
> 
> You need to get a teathering plan with your phone provider. Be aware that  
> they might have a data cap. for example vz and at&t and sprint all have 5 
> gigs of teathering per month. If you go over you will be charged 10 dollars 
> per extra gig. Oh and that's counting your 2 gig plan you have so if you 
> don't teather you still have 4 gigs to work with and use. if you do teather 
> you have 4, but if you use some  of that to serf while on the rode you will 
> have what ever is left to teather.
> On Oct 17, 2011, at 7:50 AM, Gordon Smith wrote:
> 
>> Hi all
>> 
>> Firstly I'm very sorry for being somewhat out of the loop on this topic.  
>> It's one which I have been intending to investigate for some time but due to 
>> off-topic difficulties, I haven't been able to do so as yet.
>> 
>> It is my understanding that it is possible to create a personal hotspot and 
>> thereby use the iPhone effectively as a modem for a Mac via a USB 
>> connection.  I'm not sure whether this has been detailed on list before but, 
>> if not, does anybody happen to know how this is achieved? If so, does 
>> anybody happen to know when the message was posted and what it's subject 
>> line was?  In that case I would just check out the list archive.
>> 
>> Thank you for any assistance on this.  It's something I would very much like 
>> to be able to get working.
>> 
>> Gordon
>> 
>> 
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