The interval between the "0" level and "1" level of a binary channel with Gaussian noise is subdivided to provide

levels per symbol. The channel capacity is computed as a function of

and of the signal-noise ratio

of the original binary channel. For a sufficiently large, fixed value of

, if we increase

indefinitely, the channel capacity approaches the logarithm of

, as can be expected from continuous channel. For a fixed value of

, if we increase

indefinitely, the channel capacity approaches

. For a given value of

, there is a certain value of

, beyond which the channel capacity does not appreciably increase any longer by increasing

. The problem is first solved by a simplifying model, and then the error introduced by this simplification is estimated.