Carbon Microphone is also known as carbon button microphone or a carbon transmitter. It consists of two metal plates separated by carbon granules. One of the plates faces outwards and acts as a diaphragm. When sound waves strike these metal plates the granules change which in turn alters the electrical resistance between the plates.

Direct current passes through the two plates and the changing resistance results in changing current. The current then passes through a telephone system to change the sound into an electrical signal.

Carbon microphones once were known for their high output level performance, low impedance and reasonably low cost. One of the major drawbacks of these microphones was its low quality of sound reproduction and limited frequency response, as well as high hiss noise level. Due to these reasons they became less popular.

One of the merits of carbon microphones is that they can actually be used as amplifiers. This capability was used in early telephone repeaters, making long distance phone calls possible in the period before vacuum tubes. These carbon microphones were mechanically coupled with a magnetic telephone receiver.

Another advantage of carbon microphone is that it could be used to boost weak signals and send them down the line. This is possible as it works by changing a current passing through it, instead of generating a signal voltage as in the case of most of the microphone types. These amplifiers were soon abandoned with the development of vacuum tubes as they offered higher gain and better sound quality.

One illustration of the amplification of these carbon microphones was the oscillation caused by feedback. This results in an audible squeal from the old candlestick telephone, if its earphone were placed near the microphones.

The principal advantage of carbon microphones is that they have the ability to produce high level audio signals from very low DC voltages. And it does not need any from of additional amplification or battery.

They are widely used in safety critical applications such as mining and chemical manufacturing where higher line voltages cannot be used, due to the risk of sparking and consequent explosions. Installation of large communication infrastructure base around carbon microphones is already an expensive affair; it is considerably cheaper to maintain the existing structure than to replace it with new technology.

They are also famous as they can withstand damage from high voltage transients such as those produced by lightening strikes and electromagnetic pulses of the type generated by nuclear explosions. They are still maintained as a backup communication system in critical military installations.

In the early days, AM radio transmitters relied on carbon microphones for voice modulation of the radio signal. In the first audio transmissions by Reginald Fessenden a continuous wave from an Alexanderson alternator was fed through a carbon microphone.

Carbon microphones are still used in certain niche applications in the developed world. This is because of its wide compatibility with existing equipment.