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Just hack your phone, connect wire in front off up converter RF circuitry.
If it's not your phone you'd like to eavesdrop on, there is no chance arduino could
break a code, as all messages are encrypted, even after successful interception from the air,
that is not easy task by itself ( hopping frequency, plus TDMA ).
You need little bit more, A3, A5, A8,
I still couldn't get, my apology if I'm slow on this, what exactly you gonna to push arduino to do?
Listen air traffic? There is no pin you can attach antenna to it :), so it in perspective of periphery
chips, scanners. The cheapest solution, again, break a gsm phone to use radio interface.
For beginning, probably nice to activate a field engineering menu in the phone,
than move to manage control traffic protocol ( TDMA/hopping) , and at last, decrypt a user messages.
IMHO, Atmel chip is competitive at last stage, I don't think they have a more powerful MCU
around in the beginning 1990-th.
I short:
a). No, Arduino couldn't listen traffic.
b). Yes, but definitely software part enormous for single knight.