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UPDATE Tried two different grips.

1. With a full hand wrap around the back of the phone.

My 3gs with 3.1.3 is 5 bars lying flat. I pick it up and then it drops 4,3,2,1, searching... Then I lay it down again and it goes back up to 5 bars.

2. Just thumb and 4 fingers grip (without palm covering back of phone).

one bar drop...

Full hand wrap drops reception big time!

Well, whaddya know. Same here. If I hold it with the tips of my fingers, like a normal call, bars stay full. But if I palm it, the bars drop.
 
So it seems like apple should PROBABLY be able to fix this, but who knows. The way Apple has been handling things lately, we will be lucky if we hear from them on this issue by New Years Eve.
 
I just did this with my 3G running 3.1.3 - 5 bars, palm, 1 bar, set the phone down, 2,3,4,5 bars again.
 
My phone doesn't do that at all. I updated to iOS4 yesterday and I still have full bars. Don't really know if that's accurate, but the bars are there. lol even when I grasp it, nothing happens.

Yeah I watched a guys video and he tried show what would happen when you held the iPhone 4 and it stayed the exact same.
 
I just had the same thing happen on my 3GS on iOS4. If I hold the phone and don't cover the lower left of the phone, it's fine...5 bars of 3G. However if I cover the lower left corner with my fingers, the bars start to drop until 3G has zero bars and it switches to EDGE. As soon as I remove my fingers from the lower left, the bars start going up.

Incidentally, I can grasp without it affecting the bars as long as my fingers aren't covering behind the lower left corner.

Definitely an iOS4 issue.
 
Yep this happens on my 3GS with iOS 4 and my friends 3G and his parents 3GSs he just asked me about it. I hope apple fix this soon.
 
Yes I reproduced it on my iPhone 3G!!!

I went to the basement where reception could be iffy sometimes, saw the bars went down, but it down with 4 bars, took it up and wrapped it in my hand, and saw the bars went down to zero! It then came back up when I put it down and I could not reproduce it again. I guess it decided to lock on to the second tower.
 
i have a 3g with ios 4 and have no problems, seem to me it may not be a software issue
 
Software issue my ass,

3G speed is impacted significantly when touching the "new Antenna". Go test it your self...
 
makes since , my bars go down to on a 3gs ios 4,

the bug could be triggered with sertain settings maybe, because everyone with a iphone 4 is not effected
 
3G and 3GS have ALWAYS been like this. Just not as pronounced. Lol. You can pick it up and it looses a bar or two. Seems the iPhone 4 has an exaggeration of this, if not worse - a hardware issue. Besides, nobody finds it ODD that a physical action somehow triggers a software issue? Really?
 
i have a 3g with ios 4 and have no problems, seem to me it may not be a software issue

There's some people with iPhone 4 who aren't having this issue, so that doesn't mean anything. The guy above updated to ios4 and is having the issue now, when he didn't before.
 
I have tried this on all of my iPhones from 3G to iPhone 4. I can't replicate this event on any of them . . . I guess that's a good thing.
 
the biggest problem here is that everyone chiming in on both sides aren't using the same settings and aren't in the same place so the conditions are always different
 
well....you have to hand it to those software guys at apple....they've invented software that knows when you're holding your phone.....genius..

what crap....there is absolutely NO WAY this can be a software problem.

I'm sitting here with my phone balanced between my thigh and my knee...full 5 bars, 3G...

I slide my hand under the phone and close my hand around it (the phone has not moved!!) ....and my signal drops to nothing.

THAT IS NOT SOFTWARE.
 
After all this info, here's what I think:

It IS a software issue with OS4.

OS4 adds "intelligent tuning of the radio", as mentioned by Mossberg and iFixit. It looks at signal strength, noise, etc. and picks the right channel. It appears to be buggy.

Apparently this new radio tuning thing is not iPhone 4 specific, it applies to a 3GS on iOS 4 too.

I think the placement of the hand near or on the antenna tricks the buggy radio-tuning software and throws it off. I think this is exacerbated in areas of marginal AT&T signal to begin with, or perhaps other unique situations with signal strength, operating frequency, and nearby interferences, which is why some people are seeing the problem and others aren't. Remember, every city has a different collection of cell providers, frequencies used, etc.

I also think AT&T software updates to the towers are a factor. Mossberg said they were updating their software to increase compatibility with iPhone 4. Some posters here were told by Apple last night that this process isn't done. I noticed in my own home (Folsom, CA) that last night my hand affected signal and this morning it didn't. Maybe they rolled out the update to my area overnight.

That sums up my opinion on the matter. I'm not going to sweat it. And thankfully, keeping my hand away from the bottom isn't a super big issue. I don't like it, but at least it didn't turn out to be an issue with the entire metal band, as originally thought.
 
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