Bishop et al. (2009) proposed the modulated ensembles that are generated from the model-integrated ensemble but implicitly containing localization. Applying the modulated ensemble in an EnKF without localization equivalently performs model space localization in an EnKF. The size of the modulated ensemble is proportional to the number of non-zero eigenvalues of the localization matrix, which makes the modulate ensemble impractical to numerical weather predictions. However, for assimilating the satellite radiances, only vertical localization in model space is needed, thus the size of the modulated ensemble is approximately 10 times more than the model-integrated ensemble. Results from assimilating a single AMSU-A radiance observation in the NCEP GFS confirm that the EnKF using vertically modulated ensemble without localization produce the same vertical increment as the 4DEnVAR using the model-integrated ensemble. Results with assimilating both conventional and radiance observations in the NCEP GFS by the EnKF with the modulated ensemble and 4DEnVAR will be discussed.