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This paper presents a new modeling approach for the derivation of the capacity reduction in WCDMA downlink due to mobile-to-mobile (UE-UE) interference. The assumed frequency usage scenario is the FDD UL/DL + additional FDD DL operation at 2.5 GHz band identified by ITU-WP8F. The similar approach can be utilized also with other frequency usage scenarios and radio systems where the UE-UE interference is present. The developed downlink capacity model takes into account the average interference from closely located, spectrally adjacent mobiles. The model assumes non-uniform user distribution and the power coupling due to basestation-to-basestation (BS-BS) interference has been introduced, as well. The recognition of these interference phenomena is important since unlike the BS-UE interference between operators the DE-LE interference is difficult or even impossible to eliminate with the network planning methods. Results indicate that the effect of user distribution, adjacent network loading, UE-UE propagation, cell sizes and the BS-BS isolation have to be taken into account when comparing the performance of radio systems where the UE-LE interference is present.