The Apple ( AAPL) 3G iPhone's connection may not be worthy of the name, something that should benefit rival handset makers that have been looking for a chink in the device's armor.

iPhone owners are flooding blogs, message boards, and Apple's Web site with complaints that the new iPhone 3G is not functioning correctly on the high-speed 3G networks it was designed for.

Irate Customers

Many U.S. and foreign users are complaining that calls on 3G connections are frequently dropped, while others claim that they are stuck on the slower EDGE connection despite being stationary in a 3G coverage area.

"I have had the phone for a couple of weeks and I haven't had any dropped calls until a couple of days ago. Now, at least 50% of my call get dropped or I get a 'call failed' message when trying to make a call even though I have a strong signal on 3G," writes one iPhone owner on Apple's iPhone support forum. "The phone will also bounce from 3G to EDGE to 'No Service' and then back to 3G. The phone works fine if I turn off 3G, but that defeats the purpose of having a 3G iPhone."

London-based Nomura International equity analyst Richard Windsor released a research note this morning citing Apple's use of Infineon Technologies' ( IFX) 3G chipset as the problem, and that even with an industry leading user interface and experience, an unreliable connection causes these advantages to be "quickly be reduced to nothing.

iPhone Irritation

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