PPM stands for Pulse Position Modulation, and PCM stands for Pulse Code Modulation. Here is a basic comparison between the current crop of receivers on the market, by Jason Werner.

PPM

Our traditional "FM" is still a framed signal that the rx processes. The only difference is that it is an analog based signal. So what happens is that any signal received within the "frame" for that channel is processed. This is the famous glitch where the servos are sent screwy for an instant.

The advantages of FM are super high refresh rates because the data length is very small. Also the resolution in theory can be very high because there is no loss of signal during the conversion to digital.

Disadvantages - the "glitch". This spastic movement of the servos when a bad signal is decoded is why many people prefer to switch away from traditional PPM. Also the resolution that many of the older radios had is removed by the new "digital" txs that use only 512 or 1024 bits of resolution. But to be honest, that is a minor problem and most people would never see it.


PCM


PCM is still broadcast on the FM carrier wave. But instead of using a PPM frame setup, a digital stream is created of x bits (1024 for most). The digital stream consists of a header, a trailer, a set of parity bits, a failsafe section, and the actual control section. The receiver takes this stream/word and decodes it into the control positions based on the position in the stream. Since a small microcomputer is in the Rx, quite a bit of processing can be done during this section.

Advantages - no more glitch! While the same bad data is received by the RX, the microcomputer has the smarts to reject that bad data and not move the servos. So for that instant you simply don't get movement of the servos. For 99% of the people out there, this is the only reason they switch to PCM! Another advantage is better control of certain surfaces. On PPM, all channels are of equal value. For PCM the designer can adjust the primary channels to have more resolution than say the gear channel. This makes for a system that can be weighted towards the primary channel resolution.

Disadvantages

Proprietary - Each company's PCM is only compatible with PCM rxs and txs of their own make. Most aftermarket rxs will not work on proprietary PCM txs. So your are locked in to one brand or even one rx!

Slow refresh rate compared to PPM. The actual data stream is larger (2- 3 times) the size of PPM. Many pattern fliers used to switch to PPM simply because they felt the added speed of PPM helped them. I know that on one of my giant scale planes I can tell the difference between the PCM update and PPM update. Only one plane, but there is a difference.

lower resolution. On systems that output pure PPM, the resolution is higher on PPM then PCM. But for most of us this is not a problem. And for the killer! The PCM lockout. When the PCM rx gets too many bad packets it then goes into a lockout or failsafe position. This continues for several refresh cycles after a valid packet is received. Most are around 1 second long before control is returned. It is this lockout that has most heli fliers staying with PPM! imagine hovering and having the system lock out for a second. A glitch can be just as bad, but at least then the control is instantly returned and not held up for a second or so