During the last couple of days, I've been working on completing, cleaning up and merging a Virtual Um interface (i.e. virtual radio layer) between OsmoBTS and OsmocomBB. After I started with the implementation and left it in an early stage in January 2016, Sebastian Stumpf has been completing it around early 2017, with now some subsequent fixes and improvements by me. The combined result allows us to run a complete GSM network with 1-N BTSs and 1-M MSs without any actual radio hardware, which is of course excellent for all kinds of testing scenarios.
The Virtual Um layer is based on sending L2 frames (blocks) encapsulated via GSMTAP UDP multicast packets. There are two separate multicast groups, one for uplink and one for downlink. The multicast nature simulates the shared medium and enables any simulated phone to receive the signal from multiple BTSs via the downlink multicast group.
In OsmoBTS, this is implemented via the new osmo-bts-virtual BTS model.
Now many people would argue that GSM without the radio and actual handsets is no fun. I tend to agree, as I'm a hardware person at heart and I am not a big fan of simulation.
Nevertheless, this forms the basis of all kinds of possibilities for automatized (regression) testing in a way and for layers/interfaces that osmo-gsm-tester cannot cover as it uses a black-box proprietary mobile phone (modem). It is also pretty useful if you're traveling a lot and don't want to carry around a BTS and phones all the time, or get some development done in airplanes or other places where operating a radio transmitter is not really a (viable) option.
If you're curious and want to give it a shot, I've put together some setup instructions at the Virtual Um page of the Osmocom Wiki.