Shannon curve

Shannons capacity equation:

Shannons equation for capacity of band limited additive
white Gaussian noise channel with an average transmits
power constraint. The capacity is.

Where:
is the capacity in bits per second,
Hertz,
is the signal power and
density.

is the bandwidth in
is the noise spectral

Capacity with increasing signal power:

Increasing the signal power will mean that we can split the
signal level into more number of levels even while ensuring
low probability of error. Hence increasing signal power will
lead to more capacity. However, as the increase in capacity is
a logarithmic function of power, the returns are diminishing.
increase in capacity is diminishing as we keep
increase the value of power.

Capacity with increasing bandwidth:

The second variable to play with is the bandwidth.
Increasing the bandwidth has two effects:
1. More bandwidth means we can have more transmissions
per second, hence higher the capacity.
2. However, more bandwidth also means that there is more
noise power at the receiver.
The latter reduces the performance.
Let us try to evaluate the capacity equation when
bandwidth tends to infinity i.e.
.
From the Taylor series expansion, we know that
.
Applying this to the above equation,

increasing bandwidth alone will not lead to increase

of the capacity.
Can observe that the maximum achievable capacity by
increasing bandwidth is 1.44 times the

value.

Capacity (in bit/sec/Hz) vs Bit to noise ratio (Eb/No):

From our discussion till now, we have understood that a practical

communication should have a rate which is lower than capacity
i.e.
bits/second.
Dividing both sides of the equation by bandwidth

bits/second/Hz.
Further, from our discussion on Bit error rate for 16 PSK
modulation using Gray mapping, we know that symbol to
noise ratio is times the bit to noise ratio, i.e.

.
Substituting this into the capacity equation,

bits/second/Hz.
For notational convenience, let us define
efficiency in bits/second/Hertz.

as the spectral

The above equation can be equivalently represented as,

In the above equation, when

ratio should be,

tends to zero, the bit to noise

.
(Thanks to LHospitals rule).
This means that for reliable communication, we need to
have

or equivalently expressing in

decibels,
The plot captures the equation,

.
It divides the area into two regions:
(a) In the region below the curve, reliable communication is
possible and
(b) in the region above the curve, reliable communication is
not possible.
Closer the performance of a communication system is to the
curve, more optimal is the system.