So what I am gathering by all this is that it is illegal to use your cell phone as a WiFi hot spot then?
If you're paying for a data plan on the phone, no.
Illegal, no, however it is generally a TOS violation and can get you terminated if you don't have an appropriate plan which allows tethering or hotspot functionality. Some providers prohibit tethering altogether even if you are paying for unlimited data (it makes it much easier to reach "excessive" levels of usage, the consequences of which vary by provider).
Simply having a data plan may or may not include such, so check your TOS before doing this.
Sprint has a service, which costs 29.00 a month, to turn your cell phone into a wireless hotspot for up to 5 devices to connect through.