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I'm using a 3G USB stick to connect to the internet, depending on my location the signal strength varies.

So my question is, does signal strength affect throughput and why?

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Yes and no... (depending on both stick and service)

If you are talking about the difference between five and four bars, you are not very likely to see a difference, however if talking about one and two, it can make a big difference.

The only way to really tell is to use a speed checker or the utility that comes with the 3G card and tell.

Typically on the newer faster sticks (7.2MB) quality can make a big difference. On some of the slower ones (~2MB) I do not see much of a difference from 2-5 bars. Again, it depends on many other factors.

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Yes. A weaker signal will result in a lower bandwidth connection, thus negatively affecting throughput.

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