  Physical layer network coding (PLNC) has the potential to improve throughput
of multi-hop networks. However, most of the works are focused on the simple,
three-node model with two-way relaying, not taking into account the fact that
there can be other neighboring nodes that can cause/receive interference. The
way to deal with this problem in distributed wireless networks is usage of
MAC-layer mechanisms that make a spatial reservation of the shared wireless
medium, similar to the well-known RTS/CTS in IEEE 802.11 wireless networks. In
this paper, we investigate two-way relaying in presence of interfering nodes
and usage of spatial reservation mechanisms. Specifically, we introduce a
reserved area in order to protect the nodes involved in two-way relaying from
the interference caused by neighboring nodes. We analytically derive the
end-to-end rate achieved by PLNC considering the impact of interference and
reserved area. A relevant performance measure is data rate per unit area, in
order to reflect the fact that any spatial reservation blocks another data
exchange in the reserved area. The numerical results carry a cautionary message
that the gains brought by PLNC over one-way relaying may be vanishing when the
two-way relaying is considered in a broader context of a larger wireless
network.
