Consumer Reports: Verizon IPhone Suffers Same Antenna Issues

Apple Inc. (AAPL) can't shake "antenna-gate."

The Verizon Wireless version of the iPhone, which features a new design to accommodate a different wireless technology than what long-time partner AT&T Inc. (T) uses, suffers from the same signal issues when the iPhone is gripped in a certain way, according to a review from Consumer Reports. The publication withheld its recommendation for the blockbuster smartphone.

The problem is similar in nature to the antenna issues that arose with the original iPhone 4. Consumer Reports at the time highlighted the problem and said it could not recommend the device. It was a rare black eye for Apple, but it also led to the perpetuation of the view that AT&T's network couldn't handle the increased traffic. The newest claims of weak signal conditions is a potentially embarrassing development for Verizon Wireless, which leans heavily on its reputation of offering superior network coverage.

Verizon Wireless, however, said it hasn't seen any problems with the iPhone.

"We do know the product is performing well on our network," spokesman Marquett Smith said.

He said that less than 0.05% of iPhone calls were dropped, which leads the industry. The call performance is better in major cities, he added.

An Apple spokeswoman said that the iPhone 4 had a "great antenna that was designed to work well on Verizon Wireless's network."

When a finger comes in to contact with the lower-left-side gap of the Verizon iPhone 4, the reception drops noticeably within 15 seconds, Consumer Reports said. When placed in a rubber "bumper" that wraps around the phone, the signal issues go away. Other reviewers who have tested the phone, however, haven't complained about this problem.

The issue originally cropped up when Apple redesigned the iPhone 4 to include a metal wraparound antenna, which was expected to boost the signal to the phone. But the design proved problematic because it puts the antenna in direct contact with a user's hands, which changes the way the antenna behaves.

The first instance of antenna-gate led to Apple and Chief Executive Steve Jobs specifically addressing the problem in a press conference, and the company giving away free covers to early iPhone 4 customers. Jobs' claim that the issues were universal drew the ire of competitors such as Research in Motion Ltd. (RIMM) and Motorola Mobility Holdings Inc. (MMI), who leveled their criticism over Apple's external antenna.

"Apple's attempt to draw RIM into Apple's self-made debacle is unacceptable," RIM co-CEOs Mike Lazaridis and Jim Balsillie said in a statement issued in July.

The issues also hurt AT&T's efforts to rehabilitate its reputation. The company poured billions of dollars into upgrading its network, particularly in major cities such as New York and San Francisco, only to be caught up in the antenna controversy.

Verizon Wireless potentially has more to lose if the antenna issues ring true. The carrier commands a premium and customer loyalty largely because of the perception that it offers better coverage with fewer dropped calls. So far, the iPhone has been a success for the carrier, although it hasn't disclosed how many iPhones have been sold. The company has said the advance orders it received in the first two hours exceeded the one-day total for any other device in the company's history.

Verizon Wireless is jointly owned by Verizon Communications Inc. (VZ) and Vodafone Group Plc (VOD).

Apple shares recently rose 1.3% to $347.47. Verizon shares rose 1% to $35.92.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com

Marcus and Millichap (NYSE:MMI)
Historical Stock Chart
From Jun 2024 to Jul 2024