Apparently the antennae wasn’t to blame for all of the iPhone 4’s reported reception issues after all. Lost reception and significant bar drops were actually a flaw in the algorithm that incorrectly displays how many bars a user has based on service. At least that’s what Apple wrote in a letter to iPhone 4 users released this morning on their website.

“We were stunned to find that the formula we use to calculate how many bars of signal strength to display is totally wrong,” Apple wrote. “Our formula, in many instances, mistakenly displays two more bars than it should for a given signal strength. For example, we sometimes display four bars when we should be displaying as few as two bars.”

Apple will release a software update “within a few weeks” that will fix this problem for not only the iPhone for, but also for the 3G and 3GS.

So much for more bars in more places.