This article is from the Aviation FAQ, by Geoffrey G. Peck firstname.lastname@example.org with numerous contributions by others.
FCC regulations effective March 9, 1992 state that:
o Cellular phone use while airborne is illegal. Regulations permit
cellular phone companies to cut off service of violators.
o Cellular phone use on the ground is legal, as far as the FCC is
concerned. Of course, FAA regulations still apply; for private
flights this isn't a big deal, for airline flights the FAA is
apparently making guidelines on when to allow cellular phone use.
Further info is in the Federal Register, vol. 57, pages 830-831.
Cellular radio service includes 900 MHz systems. PCS services in the
1.8 GHz band are governed by different rules, and operation is not
prohibited in aircraft by FCC rules. However, in practice, most newer
cellular and PCS systems utilize antennas which don't radiate upwards
so the phone simply won't work in the air.
Air Cell, Inc. (http://www.aircell.com) has an airborne cellular system
which is being rolled out in the US; it utilizes special cell phone
equipment in the $4-7K range and costs about $1.75/minute to use.