The basic idea of multicarrier modulation is to divide the transmitted bitstream into many different substreams and send these over many different subchannels. Typically the subchannels are orthogonal under ideal propagation conditions. The data rate on each of the subchannels is much less than the total data rate, and the corresponding subchannel bandwidth is much less than the total system bandwidth. The number of substreams is chosen to ensure that each subchannel has a bandwidth less than the coherence bandwidth of the channel, so the subchannels experience relatively flat fading. Thus, the intersymbol interference on each subchannel is small. The subchannels in multicarrier modulation need not be contiguous, so a large continuous block of spectrum is not needed for high-rate multicarrier communications. Moreover, multicarrier modulation is efficiently implemented digitally. In this discrete implementation, called orthogonal frequency division multiplexing (OFDM), the ISI can be completely eliminated through the use of a cyclic prefix.

Multicarrier modulation is currently used in many wireless systems. However, it is not a new technique: it was first used for military HF radios in the late 1950s and early 1960s. Starting around 1990, multicarrier modulation has been used in many diverse wired and wireless applications, including digital audio and video broadcasting in Europe, digital subscriber lines (DSL) using discrete multitone, and the most recent generation of wireless LANs.