Also see modulation and frequency-shift keying (FSK).
In analog FM, the frequency of the AC signal wave, also called the carrier, varies in a continuous manner. Thus, there are infinitely many possible carrier frequencies. In narrowband FM, commonly used in two-way wireless communications, the instantaneous carrier frequency varies by up to 5 kilohertz (kHz, where 1 kHz = 1000 hertz or alternating cycles per second) above and below the frequency of the carrier with no modulation. In wideband FM, used in wireless broadcasting, the instantaneous frequency varies by up to several megahertz (MHz, where 1 MHz = 1,000,000 Hz). When the instantaneous input wave has positive polarity, the carrier frequency shifts in one direction; when the instantaneous input wave has negative polarity, the carrier frequency shifts in the opposite direcetion. At every instant in time, the extent of carrier-frequency shift (the deviation) is directly proportional to the extent to which the signal amplitude is positive or negative.
In digital FM, the carrier frequency shifts abruptly, rather than varying continuously. The number of possible carrier frequency states is usually a power of 2. If there are only two possible frequency states, the mode is called frequency-shift keying (FSK). In more complex modes, there can be four, eight, or more different frequency states. Each specific carrier frequency represents a specific digital input data state.
Frequency modulation is similar in practice to phase modulation (PM). When the instantaneous frequency of a carrier is varied, the instantaneous phase changes as well. The converse also holds: When the instantaneous phase is varied, the instantaneous frequency changes. But FM and PM are not exactly equivalent, especially in analog applications. When an FM receiver is used to demodulate a PM signal, or when an FM signal is intercepted by a receiver designed for PM, the audio is distorted. This is because the relationship between frequency and phase variations is not linear; that is, frequency and phase do not vary in direct proportion.