Ham Radio does this type of thing all the time but it requires a license and it's culture promotes the custom of relaying messages for long distance. A public domain version would be CB, which is quite chaotic, and it's relay function would have to be automated somehow, and CB would have to become popular again, and society in general would have to reverse it's downward trend toward ignorance, inconsideracy and nastyness.

I am imagining a "free service". CB and ham are, cell phones are not. I would imagine a public domain cell phone to be a 2-way radio whose technical design is simple and published, and unlike the other radios, able to talk and listen at the same time. Unused cell phones would relay the signal of ones that are being used automatically so that the range is extended.

I like this a lot, but feel you should start with txt messaging first, things where retrying two or three times would be acceptable.

I like this idea a lot. And it can be used for much more than just for cell phones. With the massive proliferation of wireless devices, it should soon be possible to have them all communicate directly with each other. This way they can form a massive virtual P2P network handling all the traffic with no need for central or third party control.

Existing carriers might have to scale their operations down for all but long-distance and other more specialized communications requirements, but that should not be all bad, as providing service to the last mile has always been expensive.

I suspect that Software Radio might have the answer to solve the operational issues. See http://ourworld.compuserve.com/homepages/jmitola/

Well some "mesh networks" follow this proposal (relaying occuring in the background at a protocal level, not by people rekeying/relaying messages themselves).

However the major problem is very simple.

Batteries.

as is, if your phone had to be on, listening, and relaying messages all the time it would drain the batteries faster then currently - possibly much faster.

Software Radio, "spread spectrum" radio and "mesh networks" are all attempts to do something much like this. To a much more limited degree WIFI networks or Bluetooth networks can do some of this today.

Regarding the battery problem - that should not be a concern for much longer as miniature fuel cells start appearing everywhere. A whole bunch of companies are working on those.