The term "audio compression", meaning audio level compression, also known as companding, is used in the sound recording and live sound reinforcement fields. In this context, it refers to a process whereby the dynamic range of an audio signal is reduced.
Note: This usage should not be confused with audio data compression.
In telecommunication, companding is an operation in which the dynamic range of signals is compressed before transmission and is expanded to the original value at the receiver.
This is typically carried out in analog systems by using a voltage controlled amplifier which has its gain reduced as the power of the input signal increases.
The use of companding allows signals with a large dynamic range to be transmitted over facilities that have a smaller dynamic range capability. Companding reduces the noise and crosstalk levels at the receiver.
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Source: from Federal Standard 1037C in support of MIL-STD-188