Last week Neowin reported that Verizon had posted the instructions to update your Droid to the latest Android OS, Android 2.2 Froyo. With that update InformationWeek points out that Verizon will be disabling a couple of features on the Droid. The Froyo update will disable the ability to tether and the ability to create a Wi-Fi hotspot with your device.
The features that Verizon is disabling were built into Froyo to allow Android users easier access to the Internet from any device. Making your phone a Wi-Fi hotspot would allow you to connect to the wireless network being broadcast from the phone and use it for Internet access or to create a quick and mobile LAN between a couple of computers where Wi-Fi may not be available. Tethering would allow you to connect your phone to your computer and allow the phone to act like a modem to allow Internet access where ever you may be.
A Verizon spokesperson said in an email that, "The Droid by Motorola doesn't have [the] hardware to support a Mobile Hotspot. With tethering there is no Connection on the PC side that will allow you to tether the device so the answer is that option isn't part of this update." Though this is not an accurate statement. Droid users that have rooted their device, similar to jailbreaking an iPhone, have been able to use applications to tether their phone to a computer and create a Wi-Fi hotspot with their Droid.