Multirate (MR) modulation resembles block-coded modulation (BCM), since matrices are being used to transform binary input vectors to multilevel output vectors (blocks) of length K. Unlike BCM, attention is given to the spectral shaping of the signal to be transmitted. Hence, the encoding matrices are designed to provide simultaneous spectral shaping and Euclidean distance. The encoding matrices can be implemented by using MR digital filters of low complexity. MR modulation also resembles partial response (PR) modulation since, in both cases, a transmitter and receiver filter is used with an overall duobinary impulse response. It will be shown that MR modulation has a number of significant advantages compared with PR modulation. Thus, for example, with MR modulation, loss of synchronization or gain control, as can occur with PR modulation, cannot happen in the receiver. Furthermore, computer simulations for an additive white Gaussian noise channel demonstrate that, for a bit-error rate of 10/sup -6/, MR modulation (with K=10) gives a gain of 1.5 dB, compared with PR modulation and symbol-by-symbol detection. However, MR modulation requires a slightly higher bandwidth. It is also explained how, for block lengths K/spl ges/10, MR modulation gives a larger bandwidth efficiency than M-ary pulse-amplitude modulation with raised-cosine pulses and a rolloff factor /spl alpha//spl ges/0.1.