The cell phone is one of those rare science fiction technologies that actually made it into the real world. We may not have flying cars, personal jetpacks or moon colonies yet, but we all now carry the handheld communicator made popular by the "Star Trek" TV show in the 1960s.
Because we ALL have cell phones today, it is hard to imagine a time when we would take a walk, go shopping or drive somewhere without the ability to make an instant phone call. How did we ever survive when we were so disconnected?
I can remember driving with a realtor in the early 1980s. He had the predecessor of the cell phone -- an in-car radio phone. The way this worked was simple. There was a big radio tower in the middle of the city. The car had a big radio in the trunk -- This was a huge 25 watt radio transmitter/receiver. Inside the car was a handset and a button panel that let you choose between one of four different channels. Yes, in the early 1980s, the entire city of Raleigh, NC was served by four radio telephone channels. That's how rare car radio phones were at that time. They were incredibly expensive.
The genius of the cell phone idea was that you could break up a city into many small cells. Each cell would have a tower holding the antennas, and that tower would be able to transmit only two or three miles. Inside each cell there would be about 100 different radio frequencies in use, allowing about 50 simultaneous calls. Then, those frequencies could be reused in cells across the city by spacing things out properly. The system had huge capacity compared to the radio telephone system. Instead of one tower with four channels serving a 40-mile radius, you could have dozens of cells in a city with 50 callers in each cell. Because the towers were always just a mile or two away, the phone could get by with a one-watt transmitter. This meant the phone could be small and the battery life would be reasonable.
The cell phone system for a city was going to be expensive, because companies had to build all those towers in each city. And the initial cost of the phones was nuts. The first real, portable, battery-operated handheld cell phone was called the DynaTAC and cost $4,000. It was as big (and almost as heavy) as a brick. And the cost per minute was a dollar or more. But there were lots of rich people (stock traders, for example) who really needed the service, and they were willing to pay. There were also car phones that were cheaper, but not cheap. In the early 1980s, if you were talking to a person with a car phone, a bag phone or an actual handheld "brick" cell phone, you knew you were talking to an "important person."
As with everything else involving technology, prices fell. Today you get the phone for free, and the call only costs a dime per minute. Long distance and roaming are usually free -- something that definitely wasn't the case in the 80s. When these systems were first created, each city was an island. Companies like Sprint and MCI were tiny businesses. It wasn't until prices fell and thousands of "normal people" started subscribing that things like nationwide roaming and free long distance became possible.
For more information on cell phone technology, see How Cell Phones Work.