It isn't so much that 'the strongest signal in the passband determines the gain 
of the receiver', it's that once that strong signal sends the 
receiver into AGC, additional signals in the passband do not increase the audio 
output power when the Slope is set at or near its extreme. This is a form of 
gain compression, which is distortion, strictly speaking.

The 'landmark' paper on this was written by Jack Smith, K8ZOA, available at: 
http://www.cliftonlaboratories.com/elecraft_k3_agc_and_s-meter.htm . In it, 
Jack showed that the K3's curve of Audio Output vs. RF Input at Slope = 15 acts 
as a hard limiter. He follows that with a table of measurements where a 10 dB 
change in RF signal level results in virtually no increase in audio output. 
This 10 dB change in RF signal level could come from a single signal that 
increases by 10 dB, or additional signals in the passband that add 10 dB of RF 
input to an existing 'strong' signal -- the receiver doesn't care which. 

For many listeners, more signals added to the passband that don't result in any 
more audio is a condition that confuses and fatigues the brain and can make it 
difficult to decode the relationship between signals. I believe this is the 
'mush' that has been reported here. The effect occurs on CW, too, though I 
believe that the effect is made even  worse by the heavily compressed phone 
signals that many contesters generate.

I completely agree with Dave AB7E that the use of as little slope as possible 
(lower values of the AGC Slope parameter), coupled with higher values of AGC 
Threshhold allows the receiver to sound very natural, or open, or clean, and 
preserves as much as possible the relationship between multiple signals, which 
makes it easier for your brain to copy them. (I'm sorry for using such 
non-scientific terms, but it's the best I can do to describe it.)



Al  W6LX


>>
>> After the SNR is adequate (delayed AGC in 1960s terms, above threshold
>> today), the overall gain is reduced by some amount to maintain a
>> desired output or to prevent overload, and any other signals present
>> suffer the same gain reduction.  Hence a signal 30 dB stronger than
>> another is still 30 dB stronger even after the application of AGC.  
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