AM and FM, while valuable modulation methods, have proven inadequate to match today's needs for high-volume traffic. With millions of cell phone subscribers gobbling up more voice bandwidth, we need a modulation method that can efficiently transfer information in a reliable manner. Combined with other digital techniques, these newly-affordable methods give us more efficiency, and have the added benefit of handling digital data as well as voice. Once the baseband voice signal has been digitized, we can do whatever we want with it. We can send it at any time, send it in bursts between other messages, or operate on it with a digital algorithm that requires fewer bits to be transmitted.
Fewer bits mean more users can be accommodated.
In its various forms, IQ modulation is an efficient way to transfer information, and it also works well with digital formats. Now construct a receiver that locks to the carrier, and you can decipher information by reading the I and Q parts of the modulating signal. The information appears on a polar plot as in Fig.2 below. What baseband I and Q inputs are required to produce the modulated carrier. The positive I axis is arbitrarily chosen to represent 0 degrees relative to the unmodulated carrier.