That's absolutely right. By isolating the transmitter and receiver, you are able to create an independent channel for the receiver, which can operate independen

That's absolutely right. By isolating the transmitter and receiver, you are able to create an independent channel for the receiver, which can operate independently of the transmit channel, while each of those channels obey Shannon's law. Another correction -- Shannon's law is logarithmic -- C (bit/sec/Hz) = logbase2(1+SNR) ~= logbase2(SNR) for high SNR. Thus a 3dB increase in SNR is a 1 bit increase in capacity. Clearly, there is a low ROI on increasing tx power beyond a certain point.