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We propose a novel mobile communication system which employs adaptive beamforming techniques. In the proposed system, the capacity is increased by reusing the same channel (frequency, time slot or code) in a cell. The QoS (quality of service) is improved by inherent properties of smart antennas, like reducing BER (bit error rate), multipath fading, etc. We provide an analytical model for the proposed system. The system is modeled and analyzed by a two-dimensional Markov chain. A new algorithm is derived to obtain the equilibrium state probabilities. We also investigate the QoS of the system in terms of the blocking probability of originating calls and the forced termination probability of handoff calls. As we expect, system capacity and performance are highly improved by employing smart antennas. We believe that the proposed system can be a candidate of future mobile communication systems to provide a service with high capacity and quality.