TEID refers to 'Tunnel End Point Identifier'.

After creating a PDP context between the MS and the GGSN, the data is sent transparently between the MS and the GGSN. In other words, for computer networks geeks,  there is a virtual point to point connection between the MS and the GGSN.

TEID - GTP tunnel between the GSNs

Part of this point to point connection between the MS and the GGSN, is the tunnel between the GSNs, e.g. the SGSN and the GGSN.

The GSNs deal with each other using the GTP protocol. GTP refers to 'GPRS Tunneling protocol'. Therefore, the name of the tunnel between the GSNs is the 'GTP tunnel'.

the GSNs identify every 'GTP tunnel' by using the 'TEID'.

TEID exchange 

During the establishment of the PDP context, every GSN locally assigns a TEID for the GTP tunnel.

• This means, when the SGSN sends 'Create PDP context request' to the GGSN, this message will contain the TEID assigned for this PDP context from the SGSN side. The GGSN will use it when sending data to the SGSN.

• Therefore, the SGSN will be able to identify this data belongs to which PDP context.

• And vice versa, the same process occurs when the GGSN replies to the SGSN with 'Create PDP context response'. The GGSN will include the TEID assigned from the GGSN to this PDP context. The SGSN should use it when sending data to the GGSN.

TEID - GTP tunnel between RNC and SGSN/GGSN

 Also there is a GTP tunnel between the RNC and the SGSN. This is because the RNC and the SGSN are using GTP protocol to pass user data between them.

Therefore, The RNC and the SGSN exchange the TEID between each other.

Also, when creating a direct tunnel between the RNC and the GGSN, The GTP tunnel will exist between the RNC and the GGSN. This is in order to pass user plan data directly between them. Therefore, the RNC and the GGSN will exchange the TEID of this GTP tunnel.