Communication devices have a digital and analog interface at each end for both transmit and receive.
The analog interface is more variable subject of speed with signal quality and bit error rate (BER)/ THe digital interface may be asynchronous and thus may be faster than the analog side. Synchronous channels tend to run at the same speed. ALthough UARTS can run at same speed as
Serial ports, running at the same speed as the RS-232 are still asynchronous but generally run 2x or more baud rate on the serial port than the RS-232 interface baud rate. You could call both digital but RS-232 is more exposed to noise, so we consider the Analog nature as a signal with certain impedance and bipolar voltage but is received like TTL at a 1.3V threshold.
Since reducing Analog bandwidth in broadcast or long cables saves costs or increases savings by sharing, baud rates can be reduced by many options of compressing bits per baud including N levels of phase, amplitude, or frequency, channels & paths and digital compression. ( e.g. 16 bits per baud symbol is common but 128 or more is possible, where modulation and protocols have great effects selected for different conditions , costs in bandwidth, frequency and faster baud rates require better signal/noise ratio or SNR.
There are many general factors such as ;
1. cost,
2. performance and
3. reliability.
Cost may increase with bit rate or bytes transferred or lower latency or distance of remote location and thus infrastructure costs or remote device costs or much higher cost/MB transferred ( e.g. satellite)
Performance may be affected by broadcast latency of audio-video so speed is not simply bandwidth required but latency or lag of channel be broadcast, shared, merged or combined with may sources.
Reliability can be auto-controlled with auto-baud rate where packet error rate is counted and after some threshold, baud rate is dropped by steps until error free for some period then increased by some step size. eg WiFi <1 to 54Mbps on 802.11g. This also affects performance.
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Richa< I didn't know you were just talking about serial ports with modems.
You can run the serial COM port even slower than baud rate if you wanted, it just slows the byte rate.
But you are running fast byte rates and risk buffer overflow in hardware/software for any reason with/without flow control, a faster COM port will clear the buffer faster, allowing for more time to process the data, and less risk of buffer overflow. There are rules of thumb but each implementation has specific tradeoff, depending on interrupt stack size, CPU speed, DMA flow rates, hand-shaking latency and noise interference results, etc.
Ignoring any of these may cause errors in long haul transport.