A mobile phone is a portable telephone which receives or makes calls through a cell site (base station), or transmitting tower. Radio waves are used to transfer signals to and from the cell phone. Large geographic areas (representing the coverage range of a service provider) are split up into smaller cells to deal with line-of-sight signal loss and the large number of active phones in an area. In cities, each cell site has a range of up to approximately ½ mile, while in rural areas, the range is approximately 5 miles. Many times in clear open areas, a user may receive signal from a cell 25 miles away. An example of this is that UK mobile phone networks are available at Cap Blanc Nez in France however coverage is very limited if any service at all once away from Cap Blanc Nez itself. Each cell overlaps other cell sites. All of the cell sites are connected to cellular telephone exchanges "switches", which in turn connect to the public telephone network or another switch of the cellular company.

As the phone user moves from one cell area to another, the switch automatically commands the handset and a cell site with a stronger signal (reported by the handset) to go to a new radio channel (frequency). When the handset responds through the new cell site, the exchange switches the connection to the new cell site.

With CDMA, multiple CDMA handsets share a specific radio channel; the signals are separated by using a pseudonoise code (PN code) specific to each phone. As the user moves from one cell to another, the handset sets up radio links with multiple cell sites (or sectors of the same site) simultaneously. This is known as "soft handoff" because, unlike with traditional cellular technology, there is no one defined point where the phone switches to the new cell.

Modern mobile phones use cells because radio frequencies are a limited, shared resource. Cell-sites and handsets change frequency under computer control and use low power transmitters so that a limited number of radio frequencies can be reused by many callers with less interference. CDMA handsets, in particular, must have strict power controls to avoid interference with each other. An incidental benefit is that the batteries in the handsets need less power.

Since almost all mobile phones use cellular technology, including GSM, CDMA, and AMPS (analog), the term "cell phone" is used interchangeably with "mobile phone"; however, an exception of mobile phones not using cellular technology is satellite phones.

Old systems predating the cellular principle may still be in use in places. The most notable real hold-out is used by many amateur radio operators who maintain phone patches in their clubs' VHF repeaters.

There are a number of different digital cellular technologies, including: Global System for Mobile Communications (GSM), General Packet Radio Service (GPRS), Code Division Multiple Access (CDMA), Evolution-Data Optimized (EV-DO), Enhanced Data Rates for GSM Evolution (EDGE), 3GSM, Digital Enhanced Cordless Telecommunications (DECT), Digital AMPS (IS-136/TDMA), and Integrated Digital Enhanced Network (iDEN).

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