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This paper considers the link-level and network-level performance of code division multiple access (CDMA) pilot interference cancellation (pilot IC) technology, a low-complexity advanced receiver technology being considered for use in commercial third generation (3G) CDMA cellular systems. The concept behind this technology is to estimate and cancel at the handset receiver the interference effects associated with CDMA downlink pilot signals broadcast from the base stations of the network. The canceling of interference at the receiver improves the signal-to-interference/noise ratio (SINR), which enables increased cell capacity or throughput. In this paper, we derive SINR expressions for evaluating the probability of error performance of both the RAKE and pilot IC handset receivers, under conventional random spreading code assumptions. The approach can easily and accurately model a wide variety of transmitter, channel, and receiver conditions, including the effects of channel estimation. We also utilize radio network simulations to illustrate and quantify the capacity gains available for 3G CDMA networks through the use of pilot IC handsets. Network simulations are also used to examine the reduced level of soft-handoff found to be possible in pilot IC-based networks and the increased flexibility available in setting pilot power levels. We further consider the impact of using stronger pilot signals for improving the demodulation performance of sensitive higher-order modulation constellations that are needed to support spectrally efficient high-rate data services.