A lot of people think that cellular phones work by satellite, but they don't. Base station radio antennas are placed on tall buidings or towers so that their radio coverage divides a region into geograhic "cells". Each antenna can cover an area of about 10 square miles (26 square kilometers). As you go from cell to cell, the system switches your communication from one base station to another. You can read a lot more about this at How Stuff Works: How cellphones work.