hen information in the form of bits is to be transmitted, an oscillating wave is varied to impress or modulate information. The oscil- lating wave is referred to as a carrier. Common modulation techniques include altering the amplitude of the carrier [amplitude modulation (AM)], altering the frequency of the carrier [frequency modulation (FM)], and altering the time period or phase of the carrier [phase modu- lation (PM)]. Some communication systems also alter two characteristics of the carrier, such as amplitude and phase. We can commence our probe into the relationship of bits and baud with a simple modulation scheme referred to as frequency-shift keying (FSK), where each bit is modulated using one of two tones that we can refer to as f and f2. If we assume that all binary 1s are modulated at f and all binary 0s with f2, or vice versa, this simple modulation scheme results in each bit being equivalent to one signal change. Thus, in this situation the bit rate equals the baud rate. Now let's apply a more sophisticated modulation technique. Under phase modulation, we can vary the phase of a signal according to the composition of a single bit or a group of bits. Suppose our phase modu- lation technique involves varying the phase of the carrier to one of four positions (0°, 90°, 180°, and 270°). This modulation technique would then allow each possible combination of 2 bits to be encoded into one signal change. An example of this technique is shown in Table 2.5. In examining the relationship between bit pairs and phase change, it is clear that the bit rate is twice the signaling rate since 2 bits are packed into each signal change. The technique described above is referred to as dibit encoding and represents one of many types of data modulation techniques. For now, the important aspect of this digression is to note that the bit rate may or may not equal the baud rate, depending on the method of data encoding used by a modulation scheme. Now that we have an appreciation for the difference between bit and baud rates a