This is a result of the 7.1.1 update which has broken the WiFi hotspot if it's activated by a third party app.
I have been using an app which turns on my hotspot when my phone connects to my car's Bluetooth.
It worked flawlessly with Marshmallow.
It continued to mostly work with 7.0 (although the BBC iplayer radio app would interfere with the hotspot so needed to be force closed). Occasionally the hotspot would show an error which required a phone restart.
With 7.1.1 it fails everytime even though the hotspot is visible to other devices - but they cannot connect.
In hotspot settings, the slider which shows that the hotspot is active does not light up in this situation (although it may move, I can't remember).
However, if the hotspot is activated manually from either the hotspot settings page or from the pull down settings on the home screen, it works flawlessly every time. This isn't much use to me as I need it to activate automatically when I start my car.
I spent ages looking for a replacement app to make it work until I found a forum post from a few months ago where somebody had the same problem with (I think) the tasker app which was failing to activate the hotspot properly on a different phone running 7.1.1
Others have had problems too!
So, if you activate the hotspot manually, all will work ok. If you use an app or non-Google shortcut to activate it, you'll be out of luck.
Now, how do we get Google to fix it? There was talk of it being intentionality broken for security reasons by Google but if not, they need to patch this or bring out their own app which offers the same functionality.
Grr.
Kroma
Reason for edit: Links added
