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The main difference between the wireless underground sensor networks (WUSNs) and the terrestrial wireless sensor networks is the signal propagation medium. The underground is a challenging environment for wireless communications since the propagation medium is no longer air but soil, rock and water. The well established wireless signal propagation techniques using electromagnetic (EM) waves do not work well in this environment due to three problems: high path loss, dynamic channel condition and large antenna size. New techniques using magnetic induction (MI) create constant channel condition and can accomplish the communication with small size coils. In this paper, detailed analysis on the path loss and the bandwidth of the MI system in underground soil medium is provided. Based on the channel analysis, the MI waveguide technique for communication is developed in order to reduce the high path loss of the traditional EM wave system and the ordinary MI system. The performance of the EM wave system, the ordinary MI system and our improved MI waveguide system are quantitatively compared. The results reveal that the transmission range of the MI waveguide system is dramatically increased.