RESOLUTION:
Try the following in PowerShell to connect to the Office 365:
$creds = get-credential -username "username@domain.onmicrosoft.com" -message "Credentials"
$session = new-pssession -ConfigurationName Microsoft.Exchange -ConnectionURI https://ps.outlook.com/powershell -Credential $creds -authentication Basic -AllowRedirection
$proxysettings = New-PSSessionOption -ProxyAccessType IEConfig
$creds = get-credential -username "username@domain.onmicrosoft.com" -message "Credentials"
$session = new-pssession -ConfigurationName Microsoft.Exchange -ConnectionURI https://ps.outlook.com/powershell -Credential $creds -authentication Basic -AllowRedirection -SessionOption $proxysettings
WARNING: Your connection has been redirected to the following URI: "https://ps.outlook.com/PowerShell-LiveID?PSVersion=4.0 "
import-pssession $session
get-mailbox
Please refer to the following MS article for Office 365 URLs and IP address ranges:
