In planning cellular system, based on Code Division Multiple Access (CDMA) system coverage and capacity must be considered. The coverage of a cell is inversely proportional to the number of users (capacity). An increase in the number of active users in the cell causes the total interference seen at the receiver to increase. This causes an increase in the required received power for each user due to the fact that each user has to maintain a certain Signal to Interference Ratio at the receiver for satisfactory performance. For a maximum allowable transmit power, an increase in the required received power will result in a decrease in the maximum distance a mobile can be from the base station (coverage). This project investigates the effect of changing modulation techniques from Binary Phase Shift Keying (BPSK) to M-ary PSK and M-ary Quadrature Amplitude Modulation (QAM) with and without the use of error correcting codes in order to improve coverage and capacity. Then modulation technique and coding at which maximum coverage and capacity occur are obtained. The factors that effect both coverage and capacity such as Signal to Interference Ratio, total system bandwidth, Information bit rates and channel conditions are considered. Multipath propagation conditions, shadow fading and other cell interference as a fraction of the current cell are also considered. Gaussian approximation is used to compute the outage probability for imperfect power control. The result obtained for Gaussian approximation is reasonably accurate in the region of interest, especially, an upper bound on the number of users a cell can support. The result obtained for M = 4, 8, 16 and 32 outperform binary modulation even without the use of error correcting codes. It is also noted that QPSK and 8QAM modulation techniques give better coverage and capacity than the other M-ary over AWGN, other cell interference and channel shadow fading with slightly better coverage and capacity for 8QAM at Pb = 10-and Pb = 10-4. However, it is also observed that the BPSK provides better coverage and capacity than 64QAM. It is also found that both coverage and capacity are improved when BCH code is used and the maximum coverage and capacity were obtained using QPSK modulation technique and BCH code. Finally, changing the probabilities of bit error rate from Pb = 10-3 to Pb = 10-4 does not effect the modulation and coding performance.