Writes JB: "Lew, I've been in the wireless and general telecommunications industry for several years. Here's more on the cell phone tracking you posted in the blog.
"All cell phones that are classified as capable of 3G (or better) services (first available circa 2003-2004) contain GPS chips just like navigation systems in vehicles. The chips broadcast pings to cell towers to enhance reception and improve tower transition while you are moving. The chips were been mandated to support E911 services at the same time. As you said, however, the GPS can't be turned off without removing the battery.
"The monitoring capabilities fall under what is known as CALEA, federal requirements to do live monitoring of any telecommunications conversation via any medium, cell, wireline, broadcast, satellite, smoke signal, etc.. To date telecommunications providers have accepted the requirements, but have not been overly successful at implementing them large scale. Law enforcement agencies maintain that they need access to any communication to protect the world from bad language at any level of jurisdiction,in any geography with no notice, and I presume, with the PATRIOT Act in force without the need for a wiretap warrant.
"The solution to this is encryption initiated at the handset, and terminated at the destination handset, although I would expect only 'government certified' (i.e. compromised) encryption algorithms to be legal for sale in the US."