Frequency division multiplexing (FDM) is a technique of multiplexing which means combining more than one signal over a shared medium. In FDM, signals of different frequencies are combined for concurrent transmission.
In FDM, the total bandwidth is divided to a set of frequency bands that do not overlap. Each of these bands is a carrier of a different signal that is generated and modulated by one of the sending devices. The frequency bands are separated from one another by strips of unused frequencies called the guard bands, to prevent overlapping of signals.
The modulated signals are combined together using a multiplexer (MUX) in the sending end. The combined signal is transmitted over the communication channel, thus allowing multiple independent data streams to be transmitted simultaneously. At the receiving end, the individual signals are extracted from the combined signal by the process of demultiplexing (DEMUX).
The following diagram conceptually represents multiplexing using FDM. It has 4 frequency bands, each of which can carry signal from 1 sender to 1 receiver. Each of the 4 senders is allocated a frequency band. The four frequency bands are multiplexed and sent via the communication channel. At the receiving end, a demultiplexer regenerates the original four signals as outputs.
Here, if the frequency bands are of 150 KHz bandwidth separated by 10KHz guard bands, then the capacity of the communication channel should be at least 630 KHz (channels : 150 × 4 + guard bands : 10 × 3).
It allows sharing of a single transmission medium like a copper cable or a fiber optic cable, among multiple independent signals generated by multiple users.
FDM has been popularly used to multiplex calls in telephone networks. It can also be used in cellular networks, wireless networks and for satellite communications.
OFDM is a technique where the channel bandwidth is split into many closely packed sub-carriers or narrowband channels each of which transmits signals independently using techniques like QAM (Quadrature Amplitude Modulation). Consequently, they do not need any guard bands and thus have better utilization of available bandwidth.