Recently, the telephone network has been freeing itself of its dependence on wires. Cellular telephones, which came into widespread use in the 1990s, use radio waves to connect a small, hand-held telephone to a nearby base station. The base station connects directly to the telephone network. Cordless telephones use the same concept, but unlike cordless telephones, cellular telephones are designed to communicate with whatever base station is closest, rather than with one particular base station.
There are three major challenges in the design of cellular networks.
This fourth-power propagation loss was traditionally considered only to be a hindrance to wireless communication. It had to be overcome by greatly boosting the transmitted power. The cellular concept turns this hindrance into an advantage. It observes that since the loss is so high, beyond a certain distance the same frequencies can be re-used without significant interference. Thus, the service area is divided into cells idealized below:
In this (hypothetical) picture, the Berkeley campus is served by a base station in area A. Downtown Berkeley is in area B. These two base stations must coordinate a "hand off" when someone riding the BART shuttle from downtown Berkeley to the Berkeley campus is using their cellular phone. Emeryville (area F) can re-use the frequencies used in area A because the propagation loss is sufficient that telephone conversations in area A will not interfere with conversations in area F.
A second benefit of the cellular concept is that, at least in urban areas, a cellular phone is never far from a base station. Thus, it does not need to transmit a high-power radio signal to reach a base station. This makes it possible to operate on a small battery.
Ideally, a cellular phone, with its one phone number, could be called anywhere in the world, wherever it happens to be, without the caller needing to know where it is. Unfortunately, the technological and organizational infrastructure is not quite there yet. When a phone "roams" out of its primary service area, it has to negotiate with the service provider in a new area for service. That service may be incomplete, for example allowing outgoing but not incoming calls. Charges may be exorbitant, and technical glitches may prevent smooth operation.
One candidate technology for solving these problems is a suite of global telephony services based on low-earth-orbit (LEO) satellites. One such project (now bankrupt) is the Iridium project, spearheaded by Motorola, and so named because in the initial conception, there would be 77 satellites. The iridium atom has 77 electrons. The idea is that enough satellites are put into orbit that one is always near enough to communicate with a hand-held telephone. When the orbit is low enough that a hand-held telephone can reach the satellite (a few hundred kilometers above the surface of the earth), the satellites move by fairly quickly. As a consequence, during the course of a telephone conversation, the connection may have to be handed off from one satellite to another. In addition, in order to be able to serve enough users simultaneously, each satellite has to re-use frequencies according to the cellular concept. To do that, it focuses multiple beams on the surface of the earth, as suggested by the following (somewhat schematic) picture:
There is some debate about whether this approach is economically viable.
The investment already has been huge, so the risks are high. Better networking
of terrestrial cellular services may provide formidable competition. The
LOS approach, however, has one advantage that terrestrial services cannot
hope to match: truly worldwide service. The satellites are expected to
provide service essentially everywhere, even in remote wilderness areas
and at sea.

This strange design evolved. There has been progress to correct this by providing end-to-end digital service. The first such effort (in the sense of attempting to reach the largest number of customers), is ISDN (integrated-services digital network), which is now largely obsolete. In ISDN, the bit stream in the telephone network is made available at the endpoint, at the customer site. However, ISDN was designed 10 years before the internet took off, and due to sluggish market demand, was only very slowly introduced. As a result, by the time it was really needed (for internet access), it was old technology that barely outpaced voiceband data modems.
Today, there are two options, DSL and cable modems. "DSL," which stands for digital subscriber line, is similar to ISDN in principle, but with much higher speed access. Cable modems use the cable TV infrastructure instead of telephone lines to get to the customer site. The same cable is shared by many users (and of course, by cable TV broadcast). DSL uses the same telephone lines that already connect telephones to the central office, but replaces the line card at the central office. In both cases, a modem is needed at the customer site.