As far as I know the reason that the phone stops working as you get higher is that it can "see / be seen" by more than 1 cell on the same frequency. The phone network sees this as a possible cloned phone - how else could the same phone be talking to 2 cells at the same time? The spacing of cells using the same freq. is worked out so that a phone ON THE GROUND cannot suffer this problem.
If you are, for example, close to London you will find problems with using the phone once you get a few hundred feet up (many low powered cells / higher density of re-use of frequencies). On the other hand if you fly over, for example, the middle of Dartmoor then you can get much higher before you get logged off the network.
OC619