The modulation and coding used in a digital communication system depend on the characteristics of the channel. The two main characteristics of the channel are BANDWIDTH and POWER. In addition the other characteristics are whether the channel is linear or nonlinear, and how free the channel is free from the external interference.

Five channels are considered in the digital communication, namely: telephone channels, coaxial cables, optical fibers, microwave radio, and satellite channels.

Telephone channel: It is designed to provide voice grade communication. Also good for data communication over long distances. The channel has a band-pass characteristic occupying the frequency range 300Hz to 3400hz, a high SNR of about 30db, and approximately linear response.
For the transmission of voice signals the channel provides flat amplitude response. But for the transmission of data and image transmissions, since the phase delay variations are important an equalizer is used to maintain the flat amplitude response and a linear phase response over the required frequency band. Transmission rates upto16.8 kilobits per second have been achieved over the telephone lines.

Coaxial Cable: The coaxial cable consists of a single wire conductor centered inside an outer conductor, which is insulated from each other by a dielectric. The main advantages of the coaxial cable are wide bandwidth and low external interference. But closely spaced repeaters are required. With repeaters spaced at 1km intervals the data rates of 274 megabits per second have been achieved.

Optical Fibers: An optical fiber consists of a very fine inner core made of silica glass, surrounded by a concentric layer called cladding that is also made of glass. The refractive index of the glass in the core is slightly higher than refractive index of the glass in the cladding. Hence if a ray of light is launched into an optical fiber at the right oblique acceptance angle, it is continually refracted into the core by the cladding. That means the difference between the refractive indices of the core and cladding helps guide the propagation of the ray of light inside the core of the fiber from one end to the other.
Compared to coaxial cables, optical fibers are smaller in size and they offer higher transmission bandwidths and longer repeater separations.

Microwave radio: A microwave radio, operating on the line-of-sight link, consists basically of a transmitter and a receiver that are equipped with antennas. The antennas are placed on towers at sufficient height to have the transmitter and receiver in line-of-sight of each other. The operating frequencies range from 1 to 30 GHz.
Under normal atmospheric conditions, a microwave radio channel is very reliable and provides path for high-speed digital transmission. But during meteorological variations, a severe degradation occurs in the system performance.

Satellite Channel: A Satellite channel consists of a satellite in geostationary orbit, an uplink from ground station, and a down link to another ground station. Both link operate at microwave frequencies, with uplink the uplink frequency higher than the down link frequency. In general, Satellite can be viewed as repeater in the sky. It permits communication over long distances at higher bandwidths and relatively low cost.