Interference problems caused by mobile units using the same channel in adjacent areas proved that all channels could not be reused in every cell. Areas had to be skipped before the same channel could be reused. Even though this affected the efficiency of the original concept, frequency reuse was still a viable solution to the problems of mobile telephony systems.

Engineers discovered that the interference effects were not due to the distance between areas, but to the ratio of the distance between areas to the transmitter power (radius) of the areas. By reducing the radius of an area by 50 percent, service providers could increase the number of potential customers in an area fourfold. Systems based on areas with a one-kilometer radius would have one hundred times more channels than systems with areas 10 kilometers in radius. Speculation led to the conclusion that by reducing the radius of areas to a few hundred meters, millions of calls could be served.

The cellular concept employs variable low-power levels, which allow cells to be sized according to the subscriber density and demand of a given area. As the population grows, cells can be added to accommodate that growth. Frequencies used in one cell cluster can be reused in other cells. Conversations can be handed off from cell to cell to maintain constant phone service as the user moves between cells (see Figure 3).

Figure 3. Mobile Telephone System Using a Cellular Architecture

The cellular radio equipment (base station) can communicate with mobiles as long as they are within range. Radio energy dissipates over distance, so the mobiles must be within the operating range of the base station. Like the early mobile radio system, the base station communicates with mobiles via a channel. The channel is made of two frequencies, one for transmitting to the base station and one to receive information from the base station.