The cellular/mobile phone system is one that is perfectly set up to be
exploited by phreaks with the proper knowledge and equipment. Thanks to
deregulation, the regional BOC's (Bell Operating Companies) are scattered
and do not communicate much with each other. Phreaks can take advantage of
this by pretending to be mobile phone customers whose "home base" is a city
served by a different BOC, known as a "roamer". Since it is impractical
for each BOC to keep track of the customers of all the other BOC's, they
will usually allow the customer to make the calls he wishes, often with a
surcharge of some sort.

The bill is then forwarded to the roamer's home BOC for collection.
However, it is fairly simple (with the correct tools) to create a bogus ID
number for your mobile phone, and pretend to be a roamer from some other
city and state, that's "just visiting". When your BOC tries to collect for
the calls from your alleged "home BOC", they will discover you are not a
real customer; but by then, you can create an entirely new electronic
identity, and use that instead.
How does the cellular system know who is calling, and where they are?
When a mobile phone enters a cell's area of transmission, it transmits its
phone number and its 8 digit ID number to that cell, who will keep track of
it until it gets far enough away that the sound quality is sufficiently
diminished, and then the phone is "handed off" to the cell that the
customer
has walked or driven into. This process continues as long as the phone has
power and is turned on. If the phone is turned off (or the car is),
someone
attempting to call the mobile phone will receive a recording along the
lines of "The mobile phone customer you have dialed has left the vehicle
or driven out of the service area." When a call is made to a mobile
phone,
the switching equipment will check to see if the mobile phone being called
is
"logged in", so to speak, or present in one of the cells. If it is, the
call will then act (to the speaking parties) just like a normal call - the
caller may hear a busy tone, the phone may just ring, or the call may be
answered.
How does the switching equipment know whether or not a particular
phone is authorized to use the network? Many times, it doesn't. When a
dealer installs a mobile phone, he gives the phone's ID number (an 8 digit
hexadecimal number) to the local BOC, as well as the phone number the BOC
assigned to the customer. Thereafter, whenever a phone is present in one
of the cells, the two numbers are checked - they should be registered to
the same person. If they don't match, the telco knows that an attempted
fraud is taking place (or at best, some transmission error) and will not
allow calls to be placed or received at that phone. However, it is
impractical (especially given the present state of deregulation) for the
telco to have records of every cellular customer of every BOC. Therefore,
if you're going to create a fake ID/phone number combination, it will need
to be "based" in an area that has a cellular system (obviously), has a
different BOC than your local area does, and has some sort of a "roamer"
agreement with your local BOC.

How can one "phreak" a cellular phone? There are three general areas
when phreaking cellular phones; using one you found in an unlocked car
(or an unattended walk-about model), modifying your own chip set to look
like a different phone, or recording the phone number/ID number
combinations
sent by other local cellular phones, and using those as your own. Most
 

cellular phones include a crude "password" system to keep unauthorized
users from using the phone - however, dealers often set the password
(usually a 3 to 5 digit code) to the last four digits of the customer's
mobile phone number. If you can find that somewhere on the phone, you're
in luck. If not, it shouldn't be TOO hard to hack, since most people
aren't smart enough to use something besides "1111", "1234", or whatever.
If you want to modify the chip set in a cellular phone you bought
(or stole), there are two chips (of course, this depends on the model and
manufacturer, yours may be different) that will need to be changed - one
installed at the manufacturer (often epoxied in) with the phone's ID
number, and one installed by the dealer with the phone number, and possible
the security code. To do this, you'll obviously need an EPROM burner
as well as the same sort of chips used in the phone (or a friendly and
unscrupulous dealer!). As to recording the numbers of other mobile phone
customers and using them; as far as I know, this is just theory... but it
seems quite possible, if you've got the equipment to record and decode it.
The cellular system would probably freak out if two phones (with valid
ID/phone number combinations) were both present in the network at once,
but it remains to be seen what will happen.

-----------------Jolly Roger