Historically, your mobile provided has always known where you are to some extent. With GSM (I believe there is a difference with CDMA, but I am not to familiar with it, so I will skip it) the service would know what the nearest base station to you was. With this information, they would that you were in a certain area. The reason they need to know this is so that when you make a phone call, they know which base station to forward the authentication information to.
One little point to make here is that one can tell approximately how far you are from a base station based on signal strength. If you can find out the distance from several base stations, you can use a method called multilateration to calculate an more accurate location. The more distances you know, the more accurate the location is. This is how location-based services, such as Google Maps, work on a handset with no GPS.
Now, it would be very very very easy for an service provider to obtain the location of any customer and store it, but it may be ILLEGAL!!! Under the European Data Protection Directive (and analogous legislation in other countries) no company may collect any personal data about you without your explicit consent. Now we need to clear up two points (in the simplest case):
1) Is your location personal data
2) Did the company have your consent
So, let's start with point 1. The defintion of personal data is as follows in Article 1 Clause 2 Sub-Clause a:
'personal data' shall mean any information relating to an identified or identifiable natural person ('data subject'); an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity;
I think we can safely say that a person's location and their movements would definitely qualify. So that's one point out of the way.
Next, we need to know if this information was collected legally. I'm going to go out on a limb and say probably. Most companies have you agree to a Terms of Service, which nobody ever reads. This is because it tends to be dozens of pages written in legal parlance. It's enough to make any sane non-lawyer cry tears of sheer anguish. We all sign our consent to it having read the summary and hope we haven't signed away one of our kidneys.
In this case, it's not really the end of the world if our cellphone provider knows where we are. The problem arises when they decide to share that data. In the Terms of Service it may say that they can share this information with certain 3rd parties for any reason. This means that marketing companies could potentially track your every move and learn a lot about your preferences. This could be a problem.
This is an example of why privacy experts complain bitterly about the loss of privacy in the digital age. And they have every right to, with things like this, less and less information is becoming private. However, their constant and sometimes annoyingly repetitive rants tend to fall on deaf ears. Unfortunately, some people release this information themselves using applications such as Foursquare. It's a classic case of taking a horse to the river and the horse drowning itself scenario.
Although despite this, people such as Malte Spitz (link is in German) still have concerns about the privacy of their data. I would not recommend that anybody try and get their hands on what locational data they have, as it would probably not go down well. According to the article it took 6 months of legal wrangling for Herr Spitz to get this data. It would be at least as for you.
Now to sum up I would say "Big Brother is watching you!" but that is trite and cliché. And frankly a tad more alarmist than I would like to be at dark-and-scary-o'clock in the morning. So, I will go with the slightly milder "Be careful what you share on the Internet!"
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