The increasing demand of unoccupied and unregulated bandwidth for wireless communication systems will inevitably lead to the extension of operation frequencies toward the lower THz frequency range. Since atmospheric transmission windows exist in the lower THz frequency range, it can be realized that carrier frequencies of 300 GHz and beyond will be used for communications once the technology for high bitrate data transmission is available. However, the free-space path-loss and the attenuation due to molecules in the atmosphere can significantly reduce the transmittable data rate in the lower THz frequency range.The main factor affecting the behavior of terahertz band is the absorption by water vapor, which not only attenuates the transmitted signal, but also disperses the signal. A new model of the terahertz wave atmospheric propagation of attenuation and dispersion is developed by using the radiation transmission theory and the empirical continuum absorption based on the HITRAN database. Theoretical aspects of absorption are presented, emphasizing those that deserve special attention as frequency increases. The THz wave atmospheric attenuation experimental results and self- and foreign-continuum coefficients obtained with the improved THz-time domain spectroscopy (THz-TDS) technique are analyzed by this model. The intensities and locations of the observed absorption lines are in good agreement with spectral databases. This model accounts for the group velocity dispersion and the total path loss that a wave in the THz band suffers when propagating 1 km distance. The channel capacity of the THz band is investigated by this model under different conditions including antenna gains, channel bandwidth and transmitter power. In order to keep the considerations as general as possible, the derivations are based on simple assumptions and equations. The special requirement for antenna is also discussed.Three communication channels (340 GHz, 410 GHz and 667 GHz) are obtained in terms of the spectrum. The four parameters of the three channels, i.e., available bandwidth, center frequency, dispersion and transmittable data rate, are summarized and quantized. The signals through the atmosphere for the three communication channels within the corresponding atmospheric windows are not easy to broaden due to the low group velocity dispersion; high data rates of up to 10 Gbps or beyond per 1 GHz bandwidth can be transmitted via these channels if the antennas with high gains are used.