PCM

The signals in PCM are binary, which means, that there are only two possible states represented by logic 1 or high and logic 0 or low. This state remains unchangeable irrespective of the complexity of the analog waveform.
The amplitude of the analog signal needs to be measured at regular intervals to obtain PCM from an analog waveform at the source or transmitter end of a communications circuit. The number of samples per second is several times the maximum frequency of the analog waveform in cycles per second or hertz. The amplitude of the analog signal at each measurement is instantly quantized by rounding off to the nearest of the several specific predetermined levels. The number of levels is always a power of 2, for example, it is 8, 16, 32 or 64.

These numbers are represented by 3, 4, 5, or 6 binary digits or bits respectively. The output of a pulse code modulator, therefore, comes out as a series of binary numbers where each number is represented by some power of 2 bits.

A pulse code demodulator converts the binary numbers back into pulses possessing the same quantum levels as those in the modulator at the destination or receiver end of the communication circuit.

Modulation

Modulation is addition of information or signals to an electronic or optical signal carrier. You need to turn on or off the modulation to apply it to the direct current, to the alternating current and to the optical signals. The process can be imagined by thinking of a blanket waving as a form of modulation used in smoke signal transmission. In this case the carrier is the steady current of smoke. It must be noted that the Morse code which was invented for telegraphy uses binary or two state digital code which is similar to the code which is used in the transmission of signals modern computer. Binary digital code is still used in amateur radio. The alternative current or AC carrier in a certain prescribed range of frequencies is still used in most of radio and telecommunication today. The common modulation methods include amplitude modulation or AM in which the voltage applied to the carrier changes over the time; frequency modulation or FM in which frequency of the waveform changes in small but meaningful amounts; phase modulation or PM in which the natural flow of alternating current is delayed temporarily.