It all starts with something called the common pilot channel, or CPICH. Used in UMTS and other CMDA communication networks, the pilot channel is a downlink channel broadcast by Node Bs that has constant power and a known bit sequence. Steve van Skike, Senior Manager of Test and Regulatory for Nextivity told Digital Trends:
Each cell phone manufacturer uses different algorithms to calculate how many signal bars should show up on your phone.
When a cell phone is connected to data, it reports signal strength that it sees back up to the network, and the network then tries to make a smart choice about what technology, band or channel the phone will use for its user’s next communication.
For example, if you’re in a crowded place like a club, you might get pushed onto a different wireless band if for no other reason that your phone supports it. So even if you’re connected to the same network as the people around you, that doesn’t mean you’ll have the same number of signal bars on your phone.
But the real question is: Do more bars mean a better signal?
Steve also explains the difference between how iPhones and Android phones calculate signal strength:
There’s a lot of excitement as Google is rumored to release it’s MVNO, codenamed Project Fi today. One of the features to look forward to is having phones switch more easily between networks, depending on which one is stronger in your area. Also rumored is seamlessly switching your calls between WiFi and data. Since there is no standard when it comes to signal bars and algorithms, maybe Google can push carriers to come up with a standard.