Modulation : To modify or temper in someway, in telecommunications transmitter creates and emits radio waves. It is necessary in order to ensure that the relevant information is carried by the wave.
The transmitter electronically modulate or decode sound or other information onto radio waves, by varying either Amplitude Modulation (AM) or Frequency Modulation (FM) within the established range. In phase modulation the phase of the wave form is shifted slightly at a clocked rate.
Demodulation : Demodulation involves the reverse approach. It's the process of capturing information from the carrier wave. It involve detecting the individual amplitude/frequency/phase shifts in carrier, and decoding them to digital data for further process.
As Modulation is increased, more power is put in the data and lets in the carrier but it always adds up to the same amount of power.
Frequency Modulation (FM) and Amplitude Modulation (AM) :
1) Frequency Modulation (FM) has several advantages then Amplitude Modulation (AM). In that FM system is greater freedom from interference and static.
2) AM signals that are received various electric disturbances caused by thunderstorms as noise by AM receivers. A well designed FM receiver is not sensitive to such disturbances when it is tuned to sufficient strength.
3) Signal-to-noise radio in FM system is much higher than that of an AM system.
4) FM broadcasting stations can be operated in very high frequency bands. at which AM interference is frequently severe.
5) Commercial FM radio stations are assigned frequencies between 88 and 108 MHz. The range of transmission on these bands is limited so that stations operating on the same frequency can be located within a few hundred KM of one another without mutual interference.