A common strategy to utilize available resources in cellular radio systems is to control the transmitter powers. However, when applying power control to real systems, a number of challenges are prevalent. Available information in measurement reports are crude and highly quantized. This paper utilizes point-mass approximations of probability density functions to implement nonlinear estimation of relevant parameters. Most popular power control algorithms track specified target signal-to-interference ratios (SIR:s), but the challenge is to control target values in an outer control loop. Here target SIR:s are provided by utilizing models of the relation between a relevant quality measure, such as frame erasure rate (FER), and the estimated parameters. This is an interesting alternative to outer loop strategies based on relatively infrequent frame error measurements. The discussed outer loop can also include handling of different priorities. The methods proposed in this work are applicable to a general system, but FH-GSM is used as the example throughout the paper. Illuminating simulations of a FH-GSM system illustrate the behavior and performance, which are considered acceptable. By using the proposed outer loop, capacity gains of up to 30% have been observed.