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It is commonly known that power control in CDMA is needed since all users/base stations transmit on the same frequency, and power control would help to limit the interference received at the base station.

My question is more fundamental - Why is it a problem that the various incoming signals (at the base station) are received with different power? Can we not distinguish each signal as per the Spreading Code or Walsh Code?

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The various codes in each handset are not fully orthogonal so some interference occurs between the received signals at the base-station. The signal from the handset varies with distance from the base station and there are other real-world imperfections such as multi-path, building attenuation, intermodulation etc.

The range of those attenuations is more than the signal to interference ratio of the coding so it is useful to adjust the power of the handset to normalize the signals at the base station so that there is a lower ratio between the weakest handset signal and the strongest.

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Why is it a problem that the various incoming signals (at the base station) are received with different power?

It's the same problem as the old analogue cell phone system where mobile phones were allocated their own carrier frequency; a phone close to the mast lowered its transmit level so that the filters at the base station didn't get swamped with that adjacent channel when trying to receive a weak transmission from a phone a lot further away.

It's all about system management and giving the system the best chance of operating under all conditions.

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