Is the assumption of perfect channel-state information in fading channels a good assumption?

Fading channels, which are used as a model for wireless communication, are often analyzed by assuming that the receiver is aware of the realization of the channel. This is commonly justified by saying that the channel varies typically slowly with time, and the receiver is thus able to estimate it. However, this assumption is optimistic, since it is prima facie not clear whether the channel can be estimated perfectly. This paper investigates the quality of this assumption by means of the channel capacity. In particular, results on the channel capacity of fading channels are presented, both when the receiver is aware of the realization of the channel and when it is aware only of its statistics. A comparison of these results demonstrates that information-theoretic analyses of fading channels that are based on the assumption that the receiver is aware of the channel's realization can yield helpful insights, but have to be taken with a pinch of salt.