The noise may be defined as an unwanted form of energy which tend to interfere with the transmission and reception of the desired signals in a communication system.
Noise can be classified into two categories depending upon the source, such as :

External noise is that type of noise whose sources are external to a communication system.Examples of external noise are, atmospheric noise, galactic noise and industrial noise.

On the other hand, internal noise is that type of noise whose sources are internal to a communication system. Examples of internal noise are thermal noise and shot noise. This type of noise is unavoidable and it forms a basic limitation on transmission and reception of signals.

Bandwidth Limitation

The frequency range or the band of frequency needed for a particular given transmission is called as bandwidth or channel.

This bandwidth is always allocated by some international regulatory agencies. This type of regulation is essential to avoid interference among the signals having same frequency.

The information theory states that the greater is the transmission bandwidth of a communication system, the more is the information that can be transmitted.

For example, suppose one is listening to a music in an AM radio. The complete amount of information available to the human ear is contained in a frequency range upto 15 kHz, i.e., musical information extends upto a frequency of 15 kHz. However, in AM radio the maximum modulating frequency is restricted upto 5 kHz and hence the maximum bandwidth of AM transmission is 10 kHz.

Therefore, an AM radio receiver can not reproduce all the information contained in the music because this will require a bandwidth of 30 kHz.

On the other hand, the bandwidth allocated to a FM transmission is about 200 kHz. Thus, on FM receiver can easily reproduce the transmitted information without any distortion.

This means that a FM system has a better fidelity than an AM system.

Equipment Limitation

The noise and bandwidth limitation dictate theoretically what can or cannot be achieved in terms of performance in a communication system. However, this theoretical limit may not be realized in a practical system due to equipment limitations.

For example, the theory might require a band pass filter with a quality factor of 100 at a centre frequency of 1 kHz. Such a filter cannot be realised in practice. Even if a filter with nearly identical characteristics is built, the cost may exceed. Thus equipment limitation is another major problem in a communication system.