The advances over the last several decades in hardware and digital signal processing have made digital transceivers much cheaper, faster, and more power efficient than analog transceivers. More importantly, digital modulation offers a number of other advantages over analog modulation, including higher spectral efficiency, powerful error correction techniques, resistance to channel impairments, more efficient multiple access strategies, and better security and privacy. Specifically, high-level digital modulation techniques such as MQAM allow much more efficient use of spectrum than is possible with analog modulation. Advances in coding and coded modulation applied to digital signaling make the signal much less susceptible to noise and fading, and equalization or multicarrier techniques can be used to mitigate intersymbol interference (ISI). Spread-spectrum techniques applied to digital modulation can simultaneously remove or combine multipath, resist interference, and detect multiple users. Finally, digital modulation is much easier to encrypt, resulting in a higher level of security and privacy for digital systems. For all these reasons, systems currently being built or proposed for wireless applications are all digital systems.

Digital modulation and detection consist of transferring information in the form of bits over a communication channel. The bits are binary digits taking on the values of either 1 or 0. These information bits are derived from the information source, which may be a digital source or an analog source that has been passed through an A/D converter.