Publisher of 'Consumer Reports' Calls for Verizon to Clarify iPhone Upgrade Policy

As Verizon Wireless prepares its long-awaited launch of the iPhone 4 this week, Consumers Union, publisher of the influential Consumer Reports, called on the carrier Tuesday to clarify its upgrade policy should Apple (AAPL) roll out an iPhone 5 this summer. Carriers often require customers to wait toward the end of their two-year contract before upgrading to the next best, snazzy phone -- or pay an early termination fee that can cost upwards of a couple hundred bucks.

With that in mind, customers who purchase a Verizon (VZ) iPhone 4 at Thursday's launch under a two-year contract are likely ineligible to upgrade this summer to an iPhone 5. Some industry watchers have cautioned consumers to consider holding off purchasing a Verizon iPhone 4 until this summer, when Apple traditionally rolls out the next version of its popular iPhone.

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Weighing in, Parul Desai, Consumer Union's policy counsel, sent a letter to Verizon CEO Daniel Mead asking him to respond before the Thursday launch and provide "transparent answers" regarding the carrier's iPhone upgrade policy:

"Will customers receive a rebate or some type of discount towards purchasing the new iPhone model? Will customers wanting to replace the iPhone 4 with the iPhone 5 be in violation of their two-year contract commitment and thus subject to an early termination fee of $350? Will customers face any other costs, penalties, or obstacles for upgrading to an iPhone 5?" Desai asked.

A Verizon spokeswoman declined to comment on the Consumers Union letter. But the carrier may want to carefully consider it. The organization's widely read product review publication, Consumer Reports, plans to review the Verizon iPhone 4, possibly as early as this week, said a Consumer Reports spokeswoman.

Consumer Reports Takes Another Look at iPhone 4

Consumer Reports is likely to zero in on the iPhone antenna, which became entangled in controversy over performance issues in what was billed as antennagate. In fact, Consumer Reportsdeclined to recommend the iPhone 4, citing an increase in dropped calls when customers inadvertently covered the lines where the antenna bands met with their hands.

And even Apple's fix of providing free iPhone bumpers to mitigate the problem was not acceptable to Consumer Reports, because the offer was only good for a limited time.

Apple, meanwhile, has changed the antenna design for the Verizon iPhone 4, versus the AT&T (T) iPhone 4, which has been out since this summer. The bands have been shifted further away from where users may naturally position their hands. But according to an Engadget report, the decision was based on Verizon's use of CDMA chips:

While the phone does basically look identical on the outside, there are a few notable changes. The first of those changes -- and most pronounced -- is the shifting of the iPhone's antenna notches (the little black bands that intersect the frame of the device). On the Verizon version, there are four slits which are symmetrical -- two on the top right and left, and two along the bottom. Apple's Tim Cook told us that the move is all about making the new CDMA chipset play nice with the antenna design. There's no indication that any changes (or improvements) have been made to the underlying antenna structure. And conspiracy theorists take note: in low connectivity settings, we could get both the AT&T phone and the Verizon phone to dip slightly in bars if we covered the bottom half of the devices with our hands. We did not see any noticeable change in call quality or data quality.

Despite Apple's antennagate and questions surrounding Verizon's upgrade policy, Wall Street analysts are expecting the pent up demand for the iPhone on the Verizon network, since up until now the iPhone in the U.S. was only available on AT&T. Verizon, for example, sold out of its pre-order allotment within 17 hours last week.

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