EXACTLY the same issue here!
OK Ill give you the benefit of the 11 hours Ive spent on the phone and in store with both Apple and also my supplier (Tesco).
Tesco run on O2 in the UK. I also live in an area with poor 4G reception and have calls constantly dropping.
Id say for 10 of the 11 hours ive spent trying to resolve this in the past week were some of the MOST frustrating but i have eventually found out the reason if not a solution..
Apple have been quite helpful BUT - They have gone from blaming the provider for providing an incorrect SIM card to - "Its a 5G phone and 3G is being phased out" - to eventually telling me to go back to Tesco as their carrier probably doesnt offer 3G.
Tesco havent got a clue!! They clearly advertise iphone 12's (I have a mini) as having 3G capability. Having been in store twice in the last 2 days. The eventual answer I got was that they will change their website to remove the 3G part from the specification, cancel my contract and let me choose a lesser phone. Not in any way good enough!!
Apparently the Sim card they have given me does have 2G, 3G, 4G and 5G capability - They put it into an Iphone 10 in store and confirmed this. If I pop it into my Iphone 12 - It only shows 4G and 5G as being available. Although they are now in the process of sending a replacement phone and sim card "just in case".
The issue isnt with the phone. Its perfectly capable of receiving 3G PROVIDED the carrier lets it!! Tesco as stated above use O2 as their carrier. O2 remove the capability of the phone and Sim to receive and switch to 3G - restricting it to 4G and 5G only. My issue is making calls at home (poor 4G and no 5G)......Most providers give you the option to use wifi calling (i.e switching voice calls to your home internet) O2 dont as standard - They Charge for it. (Most other providers give it for free). Tesco - as a reseller simply dont have a clue.
In summary - The phone will do 3G, The sim will do 3G, The carrier doesnt let either of them use it! I really hope that helps. Im going back to Tesco for breach of contract and hopefully they will resolve it in 1 way or another (although they did state they are moving from a Pay as you go arrangement to a pay monthly one with O2 in June this year) - Apparently the new contract uses more towers so "might" be better on 4G in my area.