1) Interference is a major limiting factor for cellular radio system capacity. It is caused by mobile stations, neighboring cells using the same or adjacent frequencies, and non-cellular signals. 2) There are two main types of interference: co-channel interference which occurs between cells using the same frequencies, and adjacent channel interference which occurs between frequencies that are adjacent. 3) Co-channel interference can be reduced by increasing the channel reuse ratio, which is the ratio between the distance of co-channel cells and the cell radius. However, this reduces system capacity. Managing interference is needed to balance capacity and quality.