The design of biologically-inspired wireless communication systems using bacteria as the basic element of the system is initially motivated by a phenomenon called emph{Quorum Sensing}. Due to high randomness in the individual behavior of a bacterium, reliable communication between two bacteria is almost impossible. Therefore, we have recently proposed that a population of bacteria in a cluster is considered as a bio node in the network capable of molecular transmission and reception. This proposition enables us to form a reliable bio node out of many unreliable bacteria. In this paper, we study the communication between two nodes in such a network where information is encoded in the concentration of molecules by the transmitter. The molecules produced by the bacteria in the transmitter node propagate through the diffusion channel. Then, the concentration of molecules is sensed by the bacteria population in the receiver node which would decode the information and output light or fluorescent as a result. The uncertainty in the communication is caused by all three components of communication, i.e., transmission, propagation and reception. We study the theoretical limits of the information transfer rate in the presence of such uncertainties. Finally, we consider M-ary signaling schemes and study their achievable rates and corresponding error probabilities.