Tech giant Apple to face class action as handset antenna problem revealed to be more serious than first thought

Tech giant Apple is facing a class-action lawsuit in the United States after a Federal Court judge ruled a number of cases accusing the company, along with telco AT&T, of running a monopoly have been approved.

But the bad news doesn’t stop there for Apple, with a leading tech publication now claiming the iPhone 4 antenna problem is indeed real – but it might require more than a software update to fix.

California judge James Ware of the District Court for Northern California said a group of lawsuits challenging Apple and AT&T can now move forward as a class action. The main complaint, originally made in June 2008, challenges Apple’s authority to “lock” iPhones onto the AT&T network – the only iPhone carrier in the US.

It also says Apple has too tight a control over what applications users can install on their iPhones. Currently, all apps must be approved by Apple before being put up for sale on the App Store, but the lawsuit claims this process is too strict.

When the iPhone 3G first launched in Australia, three telcos offered the gadget and five now sell the iPhone 3GS. The same five – Telstra, Optus, Vodafone, Three and Virgin – will also launch the iPhone 4 later this month.

The individuals who originally filed the complaint against the company are upset about the exclusive AT&T deal, and say that even though users are locked into a two-year contract, they are actually subjected to a five-year contract due to Apple’s deal with the telco.

This is because American iPhones are “locked” to the AT&T network and cannot work with any other telco’s network, such as Verizon or Sprint after a two-year contract is finished. In Australia, users are able to unlock their phones for free, or for a small charge.

The antitrust lawsuit claims the actions affect competition and increase prices, and its members are seeking an injunction that would stop Apple from selling locked phones. It also wants Apple to relax its regulations on what can or cannot be included on the App Store.

The lawsuit also includes a broad definition of any potential member, saying “All persons who purchased or acquired an iPhone in the United States and entered into a two-year agreement with Defendant AT&T Mobility, LLC for iPhone voice and data service any time from June 29, 2007, to the present” are eligible.
This means anybody who purchased an iPhone in the US during the last three years can join the suit.

Meanwhile, a major tech publication has cast doubt on Apple’s promise to fix the iPhone 4 antenna issue with just a software fix, as it promised a few weeks ago.

Shortly after launch, users reported that when they held the gadget a certain way, they encountered reduced signal reception.

Apple said this was normal for many mobiles, but publication Consumer Products says this isn’t the case at all.

“Our findings call into question the recent claim by Apple that the iPhone 4’s signal-strength issues were largely an optical illusion caused by faulty software,” Mike Gikas of Consumer Reports wrote in a blog post. “The tests also indicate that AT&T’s network might not be the primary suspect in the iPhone 4’s much-reported signal woes.”

Gikas offered a solution – adding pieces of duct tape to the gaps in the external antenna. “It may not be pretty, but it works”.

The publication is a guide for many tech fans on what gadgets should or shouldn’t be purchased. Right now, Consumer Reports has marked the iPhone 4 as not recommended until a fix has been provided.

“Apple needs to come up with a permanent – and free – fix for the antenna problem before we can recommend the iPhone 4.”

Apple’s shares dropped 0.9% overnight following both pieces of bad news, closing at $US257.29.