except gps uses satellites lol
I know. You should read about how A-GPS works. The cell towers see which satellites are available and when the iPhone needs to use GPS, it queries that information from the cell towers. Without the cell towers, the iPhone is unable to find satellites and thus unable to find its location.
I did word my previous post awkwardly, though.
Have you tried waiting long enough in a clear open sky area?
Most GPS units take quite awhile after initial power-on to figure out which satellites are where before getting an initial fix. If there's cell service, this is a lot faster on the iPhone, because the phone company can quickly tell the phone which satellites are above the nearest cell tower (and their ephemeris data, etc.) But if there's no cell service, the GPS should still be able to figure it out after listening to all the possible channels and calculating long enough (5 or 10 minutes?).
BTW, a GPS is still quite useful without a built-in map display. The old fashioned way was to take a paper copy of a topo map along, and look up the GPS coordinates on it.
Yes, it simply will not work. The Maps app shows the spinning thing on the "locate me" button and then after a while it gives me an error message "Your location could not be determined." It just won't work without cell service.
iPhone 3G has an A-GPS, which is assisted GPS. It finds exact locations via GPS coordinates and cell towers. However it is not as accurate as lets say a TomTom device, which has a fully featured GPS.
Okay, there are 3 ways the iPhone can locate itself.
1. GPS. The cell towers have a GPS receiver and scans constantly for which satellites are available. It knows, at all times, which satellites are available. When the iPhone wants to use GPS, it asks the cell towers which satellites are available, and uses them to locate itself. Once the iPhone has a GPS "lock" on itself, it can be as accurate as Tom Tom because it works exactly the same way. Once you have a GPS "lock," you can go out of cell range. It no longer needs the cell towers. It only needs the cell towers to create the initial "lock" ... so I can track myself using GPS all the way to my house, but I cannot initiate the GPS tracking at my house. You need cell service to create the "lock."
2. Cell tower triangulation. It asks the cell towers where they are, then it calculates its location based on signal strength to those cell towers.
3. SkyHook. It looks at the MAC address of nearby Wi-Fi signals, then it asks SkyHook where those MAC addresses are located, and it triangulates its location based on signal strength to those Wi-Fi devices. If there's only one signal available, the accuracy is based on signal strength to that device.
I hope this is helpful to those who don't really understand how the iPhone locates itself.