Despite Apple's claims that the iPhone 4's reception problems are merely related to a faulty algorithm, other parties aren't so sure. The latest to ding the phone is Consumer Reports, which has said that it will not recommend the iPhone 4, despite the device's otherwise high marks.

Consumer Reports's verdict was issued after the publication performed extensive in-depth testing of the reception issues, using its spiffy radio frequency isolation chamber.

In this room, which is impervious to outside radio signals, our test engineers connected the phones to our base-station emulator, a device that simulates carrier cell towers [...] We also tested several other AT&T phones the same way, including the iPhone 3G S and the Palm Pre. None of those phones had the signal-loss problems of the iPhone 4.

Three separate iPhones from three different New York-area stores were subjected to the test, and all of them demonstrated the same problem: skin contact with the bottom left side of the phone results in a signal drop. Consumer Reports also confirmed that covering the lower left corner of the phone with a piece of tape or other non-conductive material does seem to fix the issue, which reinforces comments from many users who've noticed that Apple's own bumpers prevent the signal drop. The publication has said it will tests iPhone cases later this week to see if they can also help address the problem.

This latest batch of evidence would seem to strongly support the theory that this is a hardware problem; what's more, unlike the many anecdotal results already posted online, these tests carry with them the full weight of Consumer Reports's considerable reputation. A poor rating from the organization could easily sway many potential customers away from the device, despite the iPhone 4's solid sales to date.

Apple iPhone 4

Apple, for its part, has said relatively little about the problem. Earlier this month, a post on the company's Website attributed any signal issues to a faulty algorithm used to calculate signal strength--in other words, iPhones were claiming that they had a stronger signal than they actually did. The company promised that within a few weeks it would release a patch to fix the issue, using AT&T's recommended algorithm, but the software update is not available yet.

Apple's post also neatly sidestepped the possibility of a potential hardware problem--in fact, the company went so far as to claim the exact opposite, that the iPhone 4's reception is superior to other phones, including earlier models of the iPhone. Furthermore, Apple said, what reception issues exist have been experienced only by a minority of users. Apple has also failed to reply to a request for comment from Macworld on the issue.

While judgment should be reserved until Apple has actually issued its software patch, the mounting evidence seems to point to a hardware flaw in at least some of the units. If that turns out to be the case, Apple will almost certainly have to exchange many of the phones it's already sold. But if Apple hasn't addressed the issue within the next week, you can bet that it'll be a topic of conversation at Apple's upcoming quarterly financial call, scheduled for 20 July.