Note: the term "digitally controlled oscillator" has also been used to describe the combination of a voltage-controlled oscillator driven by a control signal from a digital-to-analog converter. This article is about the more recent design.
Unlike a phase-locked loop-based analog frequency synthesiser, it is capable of synthesizing a very wide range of precise frequency ratios. The NCO will generate spectral side bands symmetrically on either side of the time base frequency. The upper sideband will be attenuated compared with the lower sideband. However, the upper sideband can be successfully used in frequency synthesizers.
NCO based communications systems are attractive because they are phase continuous, a fact that is advantageous to know when receiving the signal from an NCO based transmitter.
A DCO or NCO, generally, consists of several parts:
In this way, the frequency ratios that can be produced are limited only to the precision of the arithmetic used to compute the phase. At the same time, DCOs are phase- and frequency-agile, and can trivially be modified to produce phase-modulated or frequency-modulated outputs, or quadrature outputs.
A DCO (or NCO) can consist of a digital counter such as the 82C53 chip. These produce square wave signals that are very accurate. The square wave can then be modified by standard analog waveshaping techniques. DCOs have been used as cheap replacements for VCOs in some synthesizers. In these applications, their greatest benefit is stability along with having no frequency drift.