TIA's Glossary of Telecommunication Terms
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mu-law ( 
-law) algorithm
A standard analog signal compression algorithm, used in digital communications systems of the North American digital hierarchy, to optimize, i.e. , modify, the dynamic range of an analog signal prior to digitizing. Note: The wide dynamic range of speech does not lend itself well to efficient linear digital encoding. Mu-law encoding effectively reduces the dynamic range of the signal, thereby increasing the coding efficiency and resulting in a signal-to-distortion ratio that is greater than that obtained by linear encoding for a given number of bits.