Fig (b) shows the basic concept of a varactor frequency modulator. The L1 and C1 represent the tuned circuit of the carrier oscillator. Varactor diode D1 is connected in series with capacitor C, across the tuned circuit. The value of C2 is made very large at the operating frequency so that its reactance is very low. As a result, when C2 is connected in series with the lower capacitance of D1, the effect is as if D1 were connected directly across the tuned circuit. The total effective circuit capacitance then is the capacitance of D1 in parallel with C1. This fixes the center carrier frequency.
The capacitance of D1, of course, is controlled by two factors: a fixed dc bias and the modulating signal. In Fig b, the bias on D1 is set by the voltage divider which is made up of R1 and R2. Usually either R1 or R2 is made variable so that the center carrier frequency can be adjusted over a narrow range. The modulating signal is applied through C3 and the RFC. The C3 is a blocking capacitor that keeps the DC bias out of the modulating signal circuits. The RFC is a radio frequency choke whose reactance is high at the carrier frequency to prevent the carrier signal from getting into the modulating signal circuits. The modulating signal derived from the microphone is amplified and applied to the modulator. As the modulating signal varies, it adds to or subtracts from the fixed bias voltage. Thus the effective voltage applied to D1 causes its capacitance to vary. This, in turn, produces a deviation of the carrier frequency as desired. A positive-going signal at point A adds to the reverse bias, decreasing the capacitance and increasing the carrier frequency. A negative-going signal at A subtracts from the bias, increasing the capacitance and decreasing the carrier frequency.