Two important parameters that affect the quality of signal transmission wireless systems are Bandwidth and SNR (Signal to Noise Ratio).
It is a measure of the frequency range that is occupied by a modulated signal (carrier wave + information). The bandwidth of a channel is the frequency range over which it can transmit a signal with reasonable fidelity.
Though there is an infinite spectrum of frequencies available, it is not possible to use every frequency for communication purposes, except only those under a few hundred GHz. Usable frequencies are therefore a limited resource and have to be used wisely to accommodate our vast needs. Government agencies are set up to decide rules to allocate bandwidth for various purposes. For example, a cellular signal has to lie within a specific range of continuous frequencies. While for FM radio the signal lies within a completely different continuous range of frequencies (say 88 to 108 MHz). Typically only FM, and no other form of wireless communication is conducted in this range. Now, Bandwidth is the difference between the upper and lower frequencies in this range of frequencies. Thus it is said that a 20MHz bandwidth is allocated for FM transmission. In this manner, for different purposes, a precise bandwidth is allocated by a regulatory authority regionally.
The diagram below explains the concept of bandwidth:
Figure 1 Bandwidth of a channel
Since frequency spectrum is limited, it has to be utilized efficiently. A given bandwidth is said to be used effectively if maximum information can be transmitted over it. The term Spectral efficiency is used to describe the rate of information being transmitted over a given bandwidth in specific communication systems. Spectral Efficiency may also be called bandwidth efficiency.
If a specific communication systems uses one kilo hertz of bandwidth to transmit 1,000 bits per second, then it has a spectral efficiency or bandwidth efficiency of 1 (bit/s)/Hz.
RADIO CHANNEL CAPACITY
The radio channel capacity is defined as the maximum number of simultaneous users that can be provided in a fixed frequency band. It is therefore an effective measure of the spectrum efficiency of a wireless system. It is the maximum number K0 of simultaneous transmissions that can occur in a fixed frequency band. This parameter is determined by the required signal-to-noise ratio at the input of the receiver and by the channel bandwidth W.