I understand that, due to the harsh characteristics of the underwater channel, the effective bandwidth for communication underwater (using acoustics) is severely limited. But i would like to know the technical reason behind this? and what is the impact of the underwater channel on the bandwidth?
Acoustic communication is fundamentally limited because the channel bandwith is a function of the carrier frequency, and you cannot use high frequency carriers in acoustic applications.
Typical frequencies associated with underwater acoustics are between 10 Hz and 1 MHz. The propagation of sound in the ocean at frequencies lower than 10 Hz is usually not possible without penetrating deep into the seabed, whereas frequencies above 1 MHz are rarely used because they are absorbed very quickly. Underwater acoustics is sometimes known as hydroacoustics.
The channel bandwith is then limited (given ideal circumstances) to the nyquist rate.
Things like radio can use much, much wider channels. Traditional WiFi has a typical channel bandwith of 20 Mhz, whereas the maximum possible channel width of an acoustic communication medium is ~1 Mhz.
Basically, the physical transmission medium imposes a hard upper limit on the available throughput, which is then further reduced by real-world limitations (e.g. underwater noise, etc...).
It is difficult to transmit wide bandwidth signals at reasonable power levels due to the limitations of underwater transducers. Most underwater acoustic transducers are used at their resonant frequencies in order to achieve reasonable transmitting efficiencies. Also most of these transducers have Q's on the order of 5. Thus a transducer operating at 10 kHz will only have a useful bandwidth of about 2 kHz. Higher operating frequencies allow more bandwidth but the attenuation of sound in sea water increases rapidly with frequency so the range will be limited. You can only increase the transmitting power so much before cavitation sets in when the acoustic pressure exceeds the ambient pressure and air bubbles are generated which greatly attenuate and distort the sound energy.