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A link budget, in telecommunication and networking, is a written description of all the gains and losses by a transmitter during its active state. While communicating with a receiver via a medium such as copper wire, optic fiber or wirelessly in an open space, a transmitter is responsible for encoding a signal and performing certain operations on the signal to ensure signal transmission.
A link budget makes a log by keeping all entries of losses and gains in signal propagation. A wave is attenuated via amplifiers and antennas to increase the gain product and eliminate noise. Similarly, data can be lost during propagation of a signal between the transmitter and receiver within one device or between two or more devices. Keeping track of such losses and gains is important to calculate the reliability and efficiency of a link (through which the transmitter and receiver communicate). Moreover, methods are implemented to reduce data loss by increasing antenna diversity and bandwidth of the medium. A link budget is usually made for radio and satellite services where noise and losses are generally high.