A method of interpreting a signal comprising the operations of: defining a finite number of distinct message signals for representing conditions within a wellbore; transmitting a selected one of the finite number of message signals through a drilling fluid disposed within a telemetry channel of the wellbore; receiving a distorted signal that includes the selected one of the finite number of message signals as distorted by transmission through the telemetry channel; estimating a channel impulse response describing the effects of transmission of the selected one of the finite number of message signals through the telemetry channel; applying the estimated channel impulse response to at least one of the finite number of distinct message signals to generate at least one predicted signal; making a comparison between the at least one predicted signal and the distorted signal; and estimating which of the finite number of message signals is included in the distorted signal based on the comparison; characterised in that the operation of estimating a channel impulse response comprises the operations of: collecting a plurality of observed pressure readings representing the distorted signal; generating an observation vector "b" including the plurality of observed pressure readings in the form b = b t 0 b t 1 ⋮ b t M − 1 where b(t) is an observed pressure reading observed at a particular time t, and wherein M represents a predetermined number of observations; synthesizing ideal pressure pulses corresponding to the estimated message signal to have been included in the distorted signal; creating a design matrix "A" including the ideal pressure pulses in the form A = p t 0 p t − 1 ⋯ p t 1 − N p t 1 p t 0 p t 2 − N ⋮ ⋱ p t M − 1 p t M − 2 p t M − N where p(t) is an ideal pressure pulse for the particular time t, M + N -1 represents the number of unique samples in "A" and wherein N represents a predetermined length of the estimated channel impulse response; and solving the system of linear equations Ax=b for "x," where "x" represents the estimated channel impulse response. defining a finite number of distinct message signals for representing conditions within a wellbore; transmitting a selected one of the finite number of message signals through a drilling fluid disposed within a telemetry channel of the wellbore; receiving a distorted signal that includes the selected one of the finite number of message signals as distorted by transmission through the telemetry channel; estimating a channel impulse response describing the effects of transmission of the selected one of the finite number of message signals through the telemetry channel; applying the estimated channel impulse response to at least one of the finite number of distinct message signals to generate at least one predicted signal; making a comparison between the at least one predicted signal and the distorted signal; and estimating which of the finite number of message signals is included in the distorted signal based on the comparison; collecting a plurality of observed pressure readings representing the distorted signal; generating an observation vector "b" including the plurality of observed pressure readings in the form b = b t 0 b t 1 ⋮ b t M − 1 where b(t) is an observed pressure reading observed at a particular time t, and wherein M represents a predetermined number of observations; synthesizing ideal pressure pulses corresponding to the estimated message signal to have been included in the distorted signal; creating a design matrix "A" including the ideal pressure pulses in the form A = p t 0 p t − 1 ⋯ p t 1 − N p t 1 p t 0 p t 2 − N ⋮ ⋱ p t M − 1 p t M − 2 p t M − N where p(t) is an ideal pressure pulse for the particular time t, M + N -1 represents the number of unique samples in "A" and wherein N represents a predetermined length of the estimated channel impulse response; and solving the system of linear equations Ax=b for "x," where "x" represents the estimated channel impulse response.