Error correcting codes have two opposite effects on the efficiency of cellular mobile-radio systems. Although they increase the bandwidth per channel, the codes also make signals more robust and thereby reduce the required distance between users of the same frequency band. This paper reports a mathematical study of the interactions of these two effects in determining the efficiencies of a large number of sourcecode and channel-code combinations. Within a statistical performance objective (basebandSNR geq 11dB for 90 percent of the users), the most efficient scheme in this study has an embedded differential pulse code modulation (DPCM) source code and a rate 1/2 channel code that protects 2 bits of each 4 bit DPCM code word. Based on a conservative model of cellular transmission, we estimate that the bandwidth efficiency is 3 users/cell/MHz of system bandwidth. By contrast, there are only 1.2 users/cell/MHz with uncoded transmission and 4.5 users/cell/MHz with a rather complicated variable-rate scheme. We also observe that the embedded source code, originally devised for variable-rate operation, has a higher baseband SNR than conventional DPCM in certain fixed-rate environments.