A technique facilitates diagnosis of a telemetry system, such as a mud pulse telemetry system or an electro-magnetic telemetry system. The technique comprises operating a telemetry system in a wellbore and collecting a variety of data. The data may relate to a rig state, a downhole state, a signal state, a surface state, and/or other suitable types of data. The data is processed to determine whether states of operation indicated by the data match states indicating a problem with operation of the telemetry system. If a problem is detected, appropriate information regarding the problem is transmitted for use in correcting the problem.