Analogies
Consider a receiver and two transmitters, one close to the receiver, the other far away. If both transmitters transmit simultaneously and at equal powers, then due to the inverse square law the receiver will receive more power from the nearer transmitter. Since one transmission's signal is the other's noise, the signal-to-noise ratio (SNR) for the farther transmitter is much lower. This makes the farther transmitter more difficult, if not impossible, to understand. If the nearer transmitter transmits a signal that is orders of magnitude higher than the farther transmitter then the SNR for the farther transmitter may be below detectability and the farther transmitter may just as well not transmit. This effectively jams the communication channel. In short, the near-far problem is one of detecting or filtering out a weaker signal amongst stronger signals.
To place this problem in more common terms, imagine you are talking to someone 20 feet away. If the two of you are in a quiet, empty room then a conversation is quite easy to hold at normal voice levels. In a loud, crowded bar, it would be impossible to hear the same voice level, and the only solution is for both you and your friend to speak louder. Of course, this increases the overall noise level in the bar, and every other patron has to talk louder too (this is equivalent to power control runaway). Eventually, everyone has to shout to make themselves heard by a person standing right beside them, and it is impossible to communicate with anyone more than a couple of feet away. (In general, however, a human is very capable of filtering out loud sounds; similar techniques can be deployed in signal processing where suitable criteria for distinguishing between signals can be established, see signal processing and notably adaptive signal processing.)
Taking this analogy back to wireless communications, the far transmitter would have to drastically increase transmission power which simply may not be possible.
Read more about this topic: Near-far Problem
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