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The characteristics of a digital frequency modulation system are reviewed. The Gaussian frequency response is specified and optimum filters for transmitter and receiver (both predetection and postdetection) are developed. The relationship between peak deviation and system threshold is explored and an optimum deviation established. The location of the Gaussian filters in the system is discussed. It is shown that for best threshold performance, all receiver filtering should be predetection filtering and that optimum peak deviations under these conditions may correspond to the -4-db point of the IF filter. Practical details of transmitter and receiver design are discussed. These results have been applied to a 2000-mc communication equipment.