Things get complicated if your iPhone is within range of a Wi-Fi network to which it has previously connected. With Personal Hotspot turned on and at least one device connected by Wi-Fi, USB, or Bluetooth, the iPhone will force a connection to Verizon’s 3G network, and maintain the hotspot connection. However, if no devices are connected, when the hotspot feature slumbers, the iPhone switches to the available Wi-Fi network.

You can also switch to using a Wi-Fi connection for Internet access with the Personal Hotspot active. Navigate to the Wi-Fi setting, and tap a button—Disconnect Wi-Fi Clients—that only appears if you have folks connected by Wi-Fi. While that option won’t show up if Bluetooth or USB tethering is in use, the iPhone still only uses 3G for the feature; it won’t share a Wi-Fi connection.

When you’re ready to turn the hotspot feature off, use Settings to tap the Off button in the Personal Hotspot item. In my testing, Personal Hotspot used a reasonable amount of battery power, and noticeably drained the iPhone over time, but it’s nothing compared to, say, an active GPS navigation connection. You could likely use Personal Hotspot for several hours of routine use (not continuous streaming or downloads) starting with a full charge. I recommend plugging in an iPhone via USB or a power adapter to avoid running out of juice. Because iOS puts the hotspot feature to sleep when nothing’s connected, you can leave it turned on and essentially in standby when you’re not using it.

The biggest worry you might have with the feature is burning through data. You are likely more aware of the bandwidth you’re consuming on an iPhone, which automatically throttles certain kinds of data usage when connected via 3G: streaming slows down, you can’t download music, movies, and apps larger than 20MB, and other more subtle techniques make the phone less talky. But connect a laptop or mobile device via Wi-Fi, and you might use up the monthly allowance by retrieving an iOS GPS navigation update.