Modulation is the technique where the value of each sample (i.e., the modulating signal) systematically changes the characteristics of a carrier signal (e.g., amplitude (height) or frequency (timing)). The resulting modulated wave "carries" the data. Conversely, removing the carrier signal results in the return of the original measurement.

Since amplitudes are degraded by noise, the multiplexed data stream is usually converted to a constant-amplitude pulse modulation scheme. PDM carries the information in the pulse width, which varies directly to the amplitude of the signal. PPM results if the PDM waveform is differentiated, then rectified. The distance between the two pulses represents the sampled amplitude of the sine wave, with the first pulse as the zero time reference. Average system power for PPM is much lower than that required for PDM, but at the expense of greater bandwidth.

Both PDM and PPM use constant-amplitude pulses, but are still analog representations of an analog signal. In a PCM system, each pulse is encoded into its binary equivalent before transmission. During PCM encoding, the serial output stream is conditioned for the communication link. In many cases, PCM data is not only transmitted, but also stored. When considering recording or transmitting requirements, you must establish the patterns used to represent logical one and zero values.

Over the years, a number of PCM codes have been designed to represent logic one and zero levels while achieving the greatest performance for a given application. These are shown below.