Multiplexing is a term used to describe how a signal can be divided among multiple users. This spectrum sharing allows wireless operators to maximize the use of their spectrum to accommodate a large number of users over fewer channels. For digital systems, three main multiplexing techniques are being used for wide area networks: frequency division, time division, and code division. A fourth method, called orthogonal frequency division, is the most complex of all of these methods. It is commonly used in high-speed local area networks, but is starting to grow in popularity for wide area networks as well.
Frequency-division multiplexing (FDM). Numerous signals are combined on a single channel. Each signal on the channel is assigned unique frequency for communication. The caller and the receiver tune to the same frequency to communicate. This is similar to how radio stations work. Each has its own frequency band over which it broadcasts. To listen to a particular channel, you tune the receiver to that particular frequency. For person-to-person communication, this is a very inefficient use of spectrum, hence is only used by analog wireless networks.
Time-division multiplexing (TDM). As with FDM, numerous signals are combined on a single channel, but with TDM they are divided into separate time slots. The time segments are assigned to an individual user and are rotated at regular intervals. The receiver interprets the appropriate time slot (channel) to receive the information. This technique allows for variation in the number of signals sent along the line, and constantly adjusts the time intervals to maximize bandwidth. Many of the current second-generation wireless systems are based on time-division multiplexing as it provides efficient use of spectrum with minimal interference.
Code-division multiplexing (CDM). Rather than dividing the signal using frequency or time, CDM attaches a code to each signal, and sends them all over the same broad spectrum. This results in very high spectrum efficiency and low levels of interference by other signals. Even though all of the signals are being broadcast at once, a receiver will only accept the signals with the right code. This technique is used in several second-generation wireless networks and is the basis for nearly all third-generation networks.