Q: Why does hot spot have to have a password? Seem like user should be able to make their choice, since they are paying for it.

You can change the password there to whatever you want.  Just tap on it and change

Changing your Wi-Fi password

Personal Hotspot Wi-Fi networks require a password. You cannot disable this feature.

You can change your Wi-Fi password by tapping Settings > Personal Hotspot or Settings > General > Cellular > Personal Hotspot and then tapping the Wi-Fi password.

Note: Your Wi-Fi password must be at least eight characters long and use ASCII/Unicode characters. Use of non-ASCII characters (Japanese, Russian, Chinese, and so on) will prevent other devices from connecting.

http://support.apple.com/kb/HT4517?viewlocale=en_US

Then dont use one.  I do not use one and pair my phone to my ipad all the time.  I never get asked to enter a password regardless of what might appear in WI-FI Passowrd field.  Just turn on personal hotspot on your phone and turn on bluetooth when asked and then turn on bluetooth on the ipad or whatever and and when the phone is discovered in the other device just tap on the name to pair.  Never get asked for password