Actually, yes, it's the cell site. However the newer phones that are coming out have GPS capabilities built in, and can report that information.

I know my cell phone has this capability, and ones we were looking to use on some projects have as well. Doesn't take much to add, and is getting closer to being standard equipment on phones.

The cell site is still pretty close, and based on triangulation, can determine your location to a rather small area (closer then some would like).
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Charles Gallant