Multi-level symbol operation

In principle we can use any number of symbols (symbol states) for conveying digital information. For example, why not use 1024 different voltage states, each state (symbol) conveying log21024 = 10bits. We could even consider using 1048576 symbol states, with each symbol conveying 20 bits of information!

Clearly there is a practical limit on the number of states to be used, governed by the ability of the receiving equipment to accurately resolve the individual states (voltage levels, frequencies, light intensities, and so on). This will be determined principally by the levels of noise and distortion introduced by the channel and by the TX and RX units.

For example, some of the more recent telephone modems operating at 56 kbps use in excess of 1024 different symbol states (combinations of amplitude and phase of carrier) to signal over the telephone channel, while the current digital cellular telephone systems use only two or four states because the equipment has to operate in much noisier (electrically) environments.