A cellular system uses dynamic repartitioning and channel packing to improve capacity without impacting quality. Dynamic repartitioning is employed to convert a carrier which operates, at one time, as an analog carrier to operate, at a later time, as a digital carrier in response to changes in offered traffic. Alternatively, a carrier which, at one time, operates as a digital carrier is converted to operate, at a later time, as an analog carrier in response to changes in offered traffic. Channel packing is used to allocate as many digital channels as possible to as few digital carriers as possible. In a preferred embodiment, both repartitioning and channel packing are implemented in response to call origination or call termination.