Here is the quick and simple explanation:
In order to accommodate large numbers of users, a cellular network -- like those based on GSM technology -- divides physical channels into different time slots. Every user on the system is assigned an exclusive time slot in order to avoid signal collisions and losses.
Each channel owned by a wireless carrier is roughly 200 KHz wide and can physically handle roughly eight users at a time. However, a typical cellular carrier may have control hundreds of channels, which is why you see all of those people talking at the same time as they walk down the street or drive in traffic (provided state laws allow this, of course!). This is also why you will occasionally fail to get a connection because the cellular frequencies are too crowded, or you see wireless carriers rolling in potable cell towers to accommodate massive numbers of users at sporting events and conventions.
Signal collision happen all the time in wireless communications, only because the signals are encrypted and sent in digital form (and not analog), you will never hear someone else conversation as it collides with your discussion. Also, wireless technology employs frequency hopping to move signals from a crowded time slot on one channel to one that is less populated and therefore more reliable on another. All of this is done in the blink of an eye and without any noticeable delays, although you may experience a clipped word or two as the signal is handed off to a better path. In essence, the technology acts like a furry little bunny that lives in a large vegetable garden and relies on a maze of holes and entry slots to get the best plants without encountering interference from that pesky farmer!
This was first published in April 2004