PURPOSE: To reduce the quantization error by comparing an m-bit parallel input signal. with m-bit parallel reproduced data of one sample before on the transmission side to output and transmit one discrimination bit, which is different by the absolute value of the comparison result, to the reception side.

CONSTITUTION: An 8-bit input signal is compared with 8-bit decoded data of one sample before by a comparator 102. When the absolute value (ABS) of the difference is larger than 32, '1' is outputted as the discrimination bit from the comparator 102; but otherwise, '0' is outputted. When the discrimination bit is ' l', upper three bits of the 8-bit input signal are outputted as they are; but otherwise, the 8-bit input signal is compressed to 3 bits by a nonlinear quantization circuit 104. Consequently, this system has 22 kinds of quantization step though a conventional system has 16 kinds of quantization step, and the quantization error for a larger forecast error is smaller than conventional.