This paper investigates state estimation of linear time-invariant systems where the sensors and controllers are geographically separated and connected over limited capacity, additive white Gaussian noise (AWGN) communication channels. Such channels are viewed as dropout (erasure) channels. In particular, we consider the case with limited data rates, present a necessary and sufficient condition on the data rate for mean square observability over an AWGN channel. The system is mean square observable if the data rate of the channel is larger than the lower bound given. It is shown in our results that there exist the inherent tradeoffs among the limited data rate, dropout probability, and observability. An illustrative example is given to demonstrate the effectiveness of the proposed scheme.