MOBILE PHONES OR CELL PHONES - Your mobile phone is effectively a microwave transmitter / receiver in communication with the nearest mast.
Full Duplex Radio
Any 2 phones in communication use different frequencies, so both parties can talk at the same time.

In a typical cell-phone system in the United States, the cell-phone carrier receives about 800 frequencies to use across the city. The carrier chops up the city into cells. Each cell is typically sized at about 10 square miles (26 square kilometers). Cells are normally thought of as hexagons on a big hexagonal grid, like this:


Because cell phones and base stations use low-power transmitters, the same frequencies can be reused in non-adjacent cells. The two purple cells can reuse the same frequencies.
 

Each cell has a base station that consists of a tower and a small building containing the radio equipment.


As you travel, the signal is passed from cell to cell.
 

Let's say you're on the phone and you move from one cell to another -- but the cell you move into is covered by another service provider, not yours. Instead of dropping the call, it'll actually be handed off to the other service provider.

Inside a Digital Cell Phone

Modern digital cell phones can process millions of calculations per second in order to compress and decompress the voice stream.


The parts of a cell phone

If you take a basic digital cell phone apart, you find that it contains just a few individual parts:

In the photos above, you see several computer chips. Let's talk about what some of the individual chips do. The analog-to-digital and digital-to-analog conversion chips translate the outgoing audio signal from analog to digital and the incoming signal from digital back to analog. The digital signal processor (DSP) is a highly customized processor designed to perform signal-manipulation calculations at high speed.

The microprocessor handles all of the housekeeping chores for the keyboard and display, deals with command and control signaling with the base station and also coordinates the rest of the functions on the board.


The microprocessor

The ROM and Flash memory chips provide storage for the phone's operating system and customizable features, such as the phone directory.


The Flash memory card on the circuit board


The Flash memory card removed

Some phones store certain information, such as the SID and MIN codes, in internal Flash memory, while others use external cards that are similar to SmartMedia cards.


The cell-phone speaker, microphone and battery backup

ABOVE INFORMATION FROM 'howstuffworks.com'