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Bluetooth is very popular to be used in mobile handsets for short range data transfers. Evolution of Bluetooth headsets has added to its popularity and made it an essential part of wireless body area networks (WBAN) and wireless personal area networks (WPAN) notably the cellular phones. Human body is the integral part of such applications and affects their performance due to its lossy nature. This paper investigates the effects of human body and the surrounding objects on the Bluetooth link budget of a mobile handset antenna and Bluetooth headset antenna. A thorough analysis is carried out to demonstrate the importance of surface waves in the on-body Bluetooth link.