When you speak into a cellphone, a tiny microphone in the handset converts the up-and-down sounds of your voice into a corresponding up-and-down pattern of electrical signals. A microchip inside the phone turns these signals into strings of numbers. The numbers are packed up into a radio wave and beamed out from the phone's antenna (in some countries, the antenna is called an aerial). The radio wave races through the air at the speed of light until it reaches the nearest cellphone mast.
The mast receives the signals and passes them on to its base station, which effectively coordinates what happens inside each local part of the cellphone network, which is called a cell. From the base station, the calls are routed onward to their destination. Calls made from a cellphone to another cellphone on the same network travel to their destination by being routed to the base station nearest to the destination phone, and finally to that phone itself. Calls made to a cellphone on a different network or a landline follow a more lengthy path. They may have to be routed into the main telephone network before they can reach their ultimate destination.
How cellphone masts help
At first glance, cellphones seem a lot like two-way radios and walkie talkies, where each person has a radio (containing both a sender and a receiver) that bounces messages back and forth directly, like tennis players returning a ball. The problem with radios like this is that you can only use so many of them in a certain area before the signals from one pair of callers start interfering with those from other pairs of callers. That's why cellphones are much more sophisticated—and work in a completely different way.
A cellphone handset contains a radio transmitter, for sending radio signals onward from the phone, and a radio receiver, for receiving incoming signals from other phones. The radio transmitter and receiver are not very high-powered, which means cellphones cannot send signals very far. That's not a flaw— it's a deliberate feature of their design! All a cellphone has to do is communicate with its local mast and base station; what the base station has to do is pick up faint signals from many cellphones and route them onward to their destination, which is why the masts are huge, high-powered antennas (often mounted on a hill or tall building). If we didn't have masts, we'd need cellphones with enormous antennas and giant power supplies—and they'd be too cumbersome to be mobile. A cellphone automatically communicates with the nearest cell (the one with the strongest signal) and uses as little power to do so as it possibly can (which makes its battery last as long as possible and reduces the likelihood of it interfering with other phones nearby).
source: explain that stuff
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