This paper investigates a mobile telecommunications system that supports both ad hoc and infrastructure mode operations. Based on analytic and simulation models, our study investigates how base station (BS) and ad hoc channel capacity, and the mobility and locality of mobile stations affect the performance of a dual mode system. We show that a dual mode system can significantly outperform a single mode (infrastructure) system when the degree of locality is high. Furthermore, a dual mode system can support much faster mobile users with less BS channels in comparison to an infrastructure mode system. Our study quantitatively identifies the threshold value for the number of ad hoc channels such that beyond this threshold, increasing ad hoc channel capacity will not improve the performance of a dual mode system.