Summary: In recent years, the field of mobile communication has been vastly growing due to the introduction of new detection techniques. The latest innovation is the use of smart antennas in order to increase the capacity of mobile communication systems. As an impact of this new technology, the modem design has to be reviewed. New requirements of design criteria are formulated. The need for new channel models that are dependent on the direction of arrival (DoA) is pointed out. Only a comprehensive view of the total modem including the smart antennas guarantees the development of effective algorithms for channel estimation in time and space, equalization, detection etc. Smart antennas have an inherent capability to increase the capacity of a mobile communication system, not only to serve more users and to cover a larger region, but also to increase the data rate. This new aspect has been investigated both theoretically and by measurements. It is especially important in future mobile communication systems since there is an emerging demand for higher data rates.