In the previous two chapters, we studied specific techniques for communication over wireless channels. In particular, Chapter 3 is centered on the point-to-point communication scenario and there the focus is on diversity as a way to mitigate the adverse effect of fading. Chapter 4 looks at cellular wireless networks as a whole and introduces several multiple access and interference management techniques.

The present chapter takes a more fundamental look at the problem of communication over wireless fading channels. We ask: what is the optimal performance achievable on a given channel and what are the techniques to achieve such optimal performance? We focus on the point-to-point scenario in this chapter and defer the multiuser case until Chapter 6. The material covered in this chapter lays down the theoretical basis of the modern development in wireless communication to be covered in the rest of the book.

The framework for studying performance limits in communication is information theory. The basic measure of performance is the capacity of a channel: the maximum rate of communication for which arbitrarily small error probability can be achieved. Section 5.1 starts with the important example of the AWGN (additive white Gaussian noise) channel and introduces the notion of capacity through a heuristic argument. The AWGN channel is then used as a building block to study the capacity of wireless fading channels. Unlike the AWGN channel, there is no single definition of capacity for fading channels that is applicable in all scenarios.