AM sounds bad because it’s amplitude modulated. So variation in amplitude (i.e. signal strength) results in noise when decoding. FM however is not sensitive to

AM sounds bad because it’s amplitude modulated. So variation in amplitude (i.e. signal strength) results in noise when decoding. FM however is not sensitive to this issue because its frequency modulated - slight variations in signal strength have no effect on the encoded signal. And yes, we can always upgrade the equipment. That’s what we did when we transitioned TV to digital signals and FM to digital FM - we reserved some bandwidth for over-the-air while freeing up the rest to be used for other purposes. But it’s an expensive proposition and one that happens rarely (in fact those are the only two times I’m aware of it, they happened at basically the same time, took forever, & there was insane opposition to it).