The basic concept of cellular phones began in 1947 when researchers looked at crude mobile (car) phones and realized that by using small cells (range of service area) with frequency reuse could increase the traffic capacity of mobile phones substantially, however, the technology to do it was nonexistent.
Anything to do with broadcasting and sending a radio or television message out over the airwaves comes under a Federal Communications Committee (FCC) regulation that a cell phone is actually a type of two-way radio. In 1947, AT&T proposed that the FCC allocate a large number of radio spectrum frequencies so that wide-spread mobile telephone service could become feasable and AT&T would have a incentive to research the new technology. We can partially blame the FCC for the gap between the concept of cellular service and it's availability to the public. Because of the FCC decision to limit the frequencies in 1947, only twenty three phone conversations could occur simultaneously in the same service area - not a market incentive for research.
The FCC reconsidered it's position in 1968, and stated
"if the technology to build a better mobile service works, we will increase
the frequencies allocation, freeing the airwaves for more mobile phones."
AT&T - Bell Labs proposed a cellular system to the FCC of many small,
low-powered broadcast towers, each covering a 'cell' a few miles in radius,
collectively covering a larger area. Each tower would use only a few of
the total frequencies allocated to the system, and as cars moved across
the area their calls would be passed from tower to tower.
By 1977, AT&T Bell Labs constructed and operated a prototype cellular system. A year later, public trials of the new system were started in Chicago, IL with over 2000 trial customers. In 1979, the first commercial cellular telephone system began operation in Tokyo. In 1981, Motorola and American Radio telephone started a second U.S. cellular radio-telephone system test in the Washington/Baltimore area. By 1982, the slow moving FCC finally authorized commercial cellular service for the USA. A year later, the first American commercial for analog cellular service or AMPS (Advanced Mobile Phone Service) was offered in Chicago, IL by Ameritech. Despite the incredible demand, it took cellular phone service 37 years to become commercially available in the United States.
Consumer demand quickly outstripped the system's 1982 standards, by 1987, cellular telephone subscribers exceeded one million, and the airways were crowded. Three ways of improving services existed:
The FCC did not want to handout any more bandwidth and building/splitting cells would have been expensive and add bulk to the network. To stimulate the growth of new technology, the FCC declared in 1987 that cellular licensees may employ alternative cellular technologies in the 800 MHz band. The cellular industry began to research new transmission technology as an alternative.