IPhone – Lost internet access after installing Find My iPhone

There are solutions for this. A good number of our clients use a Junos VPN portal for telecommuting associates. Meanwhile, Junos provides a free iOS VPN client that integrates very nicely with the on-device OS. Though I'm not aware of other VPN products (it's not my side of the business) I'm reasonably certain there are other products with similar functionality.

My solution would be to set up the VPN, then allow a specific rule to go back out to the iCloud service. If you're dead-set on using iCloud to monitor location, that's probably your best option. Apple Configurator does not currently allow for supervising a device's location, but I wouldn't be surprised if they added it for supervised devices in the future.

Another alternative would be to check out the available documentation from Apple to see if there's a specific feature for your use-case.

In the limited sense that Find My Phone needs a data connection, blocking the 3G (or whatever G) data connection via the carrier would prevent a remote erase / location while the device is outside Wireless range of a known hotspot.

Find My iPhone relies on a connection to the Internet, through any medium. Wi-Fi, cellular or cans with bits of string. If the thief connects it to the Internet, then it should be picked up by Find My iPhone, even if they don’t connect it via 3G.

If the thief turns the device on and connects it to the Internet, Find My iPhone will kick in.

You can check with Apple whether your Find My Phone enrollment should prevent activation of the device if they restore it to factory settings. Anyone running the publicly released iOS 7 version would not need to block the SIM as the activation lock would prevent removing the Find My Friends association by preventing an erase / restore cycle.

Finally, the cell company still could locate the device by their cell towers whether the IMEI/SIM is blocked or not.