If you've ever listened to a weak FM radio station in an urban area, you have heard fading due to interference between reflections from buildings. Fades that cause the signal to drop 10-20dB are common in an urban environment, but they're only noticeable when they cause the signal to fall to the point where the audio quality diminishes.
There are three ways to deal with fades:
Fade margin – Fade margin is extra transmit power or receiver sensitivity so that there is still enough signal even in deep fades. This is the case when you listen to a strong radio station. Indoors the signal may decrease by over 30dB in deep fades, but this is not a problem if the signal is still strong enough even in the locations where the signal fades.
Diversity – The radio could have two antennas. When the signal fades, it could simply change to the other antenna. It is rare for both antennas to be in “unlucky” positions at the same time.
Frequency Hopping / Frequency Agility – Most fading environments are “frequency-selective”. This means the locations where the signal fades at one frequency do not experience fading at other frequencies.
Fading is a bigger issue for digital radio than analog because when a digital signal falls too low the audio cuts out abruptly. The audio quality of analog transmissions degrades gradually as signal strength decreases, giving the listener warning that the signal is getting weak.
A new broadband digital radio (BDR) specification scheduled for trials in China this year supports frequency hopping. The carriers of four stations alternate among four frequencies every time slot. The receiver acquires the hopping sequence from a pilot signal.
In simulations of a receiver moving at walking speed in an urban area, frequency hopping provides the same benefit as an 8.4 to 11.5 dB (depending on code rate) increase in signal strength. Frequency hopping in this case is as good as increasing the station's output power ten times!
This is one reason digital radios often employ frequency hoping. Broadcast radio would benefit from receive antenna diversity or frequency hopping. Frequency hopping is the less expensive approach, and it doesn't rule out high-end receivers implementing antenna diversity in addition to frequency hopping.