When you switch a GSM mobile phone on, it looks in the sim card to find out what phone it is today.
It then looks for a signal on the GSM frequencies. If it can find its sim card’s home network, it logs onto that network and it then waits for a call.
The cell that it is logged onto is part of a Base Transceiver Station (BTS) (most, but not all, have three cells) This is the thing that appears on the skyline all over the place. There are thousands of these around: for example, at the time of writing Orange has nearly 10,000 in service in the UK.
Each BTS is connected to a Base Station Controller (BSC) which is the brains for a group of BTS units. It does the thinking about what power levels the BTS should use, controls the handoffs from one BTS to another, controls the frequency hopping, and does the work of keeping the phone connections to the right BTS for the mobiles using them.
Each BSC is under the control of a Mobile Switching Centre (MSC). This controls a group of BSC units, and does the clever stuff involved in keeping tabs on where all the mobiles are.
In conjunction with the network databases, it connects them to the rest of the telephone network, keeps track of what hardware is being used, validates the identity of sim cards and their associated accounts and phone numbers, keeps track of visiting phones roaming on the network and similar functions. For more details of all this, see the Network Databases page.