We proposed a hybrid indoor data network system that uses radio as a transmission medium for the lower layer and uses conventional LAN for the upper, and its distributed dynamic channel assignment scheme in the 15th LCN and other conferences. In this paper indoor radio propagation measurements at 1.2GHz are presented in oder to develop a fading channel model. The system performance is analyzed through computer simulations based on the fading channel model led from the propagation measurements. They adopt the following parameters: the number of radio terminals, the number of channels assigned to each base station, and the volume of traffic in the lower network. The results show that we can reduce the number of channels assigned to each Base Station without loss of performance under the condition that 10Mbps CSMA/CD network is used as the upper layer, and 32Kbps CSMA packet radio network is used as the lower.