That location information is not available to apps or ad networks without user consent. The government can access it from the carrier with a warrant, but that's not what we're discussing here.

Couldn't you just maintain a list of cell tower IPs and figure it out with traceroute?

Carriers have also sold customer location data, no search warrant required. Though we can rest assured that the FCC has slapped the carriers' wrists with the utmost seriousness.