Iphone 3 1 Update Disables Free Tethering Some Exchange Connectivity

As we warned before 3.1 came out, the latest iPhone update disables the tethering hack that so many of you enjoy using.  That in itself is reason enough hold off on updating. 

However, today TUAW publishes some more discouraging news.  After the 3.1 update, non-iPhone 3GS users (touch, iPhone, iPhone 3G) won’t be able to access Exchange servers for their Email, Contacts and Calendar if the Exchange connection has been set by their administrators with a forced device encryption connection.  Only iPhone 3GS devices now work in this mode.  Apple has said it improperly set up encryption on iPhone OS 3.0 which wasn’t really encrypting the Exchange information.

Luckily, the Gmail Calendar and Contacts sync that uses Microsoft’s ActiveSync API (to act like an Exchange Server) is not affected.

We’re hanging back on this update a bit.