in the transmission of fm the noise level is very low as 
compared to am , and the other factor is efficiency.

In short range comm fm is used because it's bandwidth is
very large and also in fm there is variation in carrier
frequency w.r.t. change in msg signal so there is no noise
in fm.

for short range of communication FM is better because noise 
level is very low in fm rather than am. signal to noise 
ratio is very high in fm when compared to am. the 
modulation index is very high for fm so the signal to noise 
ratio is [3/2(MI)^2] so fm is better for short range of 
communication.