For the purpose of investigating the performance of digital radio systems, Telecom Australia established and conducted over a three year period (1982-1984), a 140 Mbit/s 16 QAM digital radio field experiment. In parallel with this experiment, analytical work was undertaken to develop an "outage prediction method" to assist with route design. This paper presents the observations and conclusions drawn from this work. Emphasis is placed on the aspects which relate to system design. We show that for digital radio outage prediction, a radio path can be characterized for multipath fading by the probability of occurrence of multipath fading and the mean echo delay, while the radio equipment can be characterized by a set of normalized parameters. The performance improvements achieved through the use of adaptive equalization and space-diversity are highlighted. Finally, we present a methodology for considering the performance of digital radio systems in the presence of interference and thermal noise, and present results for system performance with adjacent channel interference.