Advantages of FM over AM

• All the transmitted power in FM is useful, while in AM most of the transmitted power is in carrier which contains no information.
• The amplitude of FM is constant which makes it independent of the modulation deption, while in AM modulation depth directs the transmitted power.
• Noise in FM is reduced to a large extent by employing amplitude limiters to remove the amplitude variations caused by noise. However these amplitude limiters cannot be used in AM as information is contained in the amplitude variations of the signal. Thus FM reception is immune to noise than AM reception.
• The noise in FM can be further reduced by increasing the deviation, which is not in AM.
• In FM if there are two or more signals received at the same frequency, the FM receiver will capture the stronger signal and eliminate the weaker signal. However in AM if there are two more signals received at the same frequency, then both will be demodulated which can lead to interference.
• FM broadcast operates in the upper VHF and UHF range, where noise effects are minimal. While on the other hand AM broadcast operates in the medium frequency (MF) and high frequency (HF) which are easily affected due to noise.

Disadvantages of FM over AM

• FM has infinite number of sidebands, while there are only two sidebands in AM.
• The channel bandwidth in FM is much higher, up to 10 times as that of AM, whereas AM has narrow channel bandwidth which is 2$f_m$.
• The design of FM transmitter and receiver is relatively complex for the modulation and demodulation purpose as compared to AM transmitter and receiver
• FM transmission and reception equipment is expensive as the circuitry is complex as compared to AM equipments which are inexpensive and relatively simple.
• In FM since the reception is limited to line of sight, the area of reception for FM is much smaller than for AM.