point 2 is right… but not complete 🙂
BTS measures the UL signal.
If UL is poor, then the PCU (MFS) sens a coding scheme adaptation “order” to the MS… UL Coding Scheme is modified.
MS measures the DL signal and reports the values to the BTS.
PCU will then decide to change the DL coding scheme of the BTS.
In EGPRS , the process is a little different.