This paper presents an investigation into the theoretical performance of diffusion adaptive networks within a distributed beam coordination application in a cell‐free communication network that utilizes coarsely quantized data. This analysis assumed data pulses with 1, 2, and 3 bits, and based on this assumption, simulations and theoretical analyses of distributed beamforming are conducted. The consistency between the simulation results and theoretical findings validated the accuracy of the calculations. Additionally, the distributed quantization aware least mean square (DQA‐LMS) algorithm was introduced for distributed beam coordination, demonstrating its superior performance in scenarios involving coarsely quantized data. Convergence conditions were provided and the results through various simulations were presented, including the array network mean square deviation (MSD), mean square error (MSE), and beamforming diagrams.