What is near-far problem?

Consider that there are 2 mobile stations (MS) transmitting at equal powers, but one is nearer to the base station (BS) compared to the other. The BS will receive more power from the nearer MS and this makes the farther MS difficult to understand. As we know, the signal of one MS is the noise for another MS and vice-versa. So the Signal-to-noise ratio (SNR) for the farther MS is much lower. If the nearer MS transmits a signal that is orders of magnitude higher than the farther MS then the SNR for farther MS may be below detectability threshold and it would seem that the farther MS is not at all transmitting. This situation is called "near-far problem" and is less pronounced in GSM than CDMA-based systems as the MS transmit at different frequencies and timeslots in case of GSM.

To overcome this problem, a power control mechanism is used so as closer MSs are commanded to use less power so that the SNR for all MSs at the BS is roughly the same.