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The time-slot mismatch loss will be avoided and the time-slot assignment will be simplified in a time-division exchange system in which the calling and the called subscriber can use independent time slots arbitrarily assigned. Code-modulation techniques make such systems economically realizable, since a tapped magnetostrictive delay line or a shift register can be used to interchange time slots assigned to the calling and called subscribers. A skeletonized experimental model to demonstrate the feasibility of the system has been developed, and its subscriberline circuit and signaling and tone system are described here. The delta-modulation technique is employed for the purpose of simplifying the modulator and demodulator circuitry and of economizing the time slot interchanging device. The modulator circuitry is considerably simplified by using a monostable blocking oscillator to perform combined operation of comparing, switching and locally-decoding. The simplification makes it possible to install a modulator and a demodulator per subscriber. The signaling and tone system is equipped with three modulators which are commonly used by all speech channels. The signal-to-noise ratio of the subscriber-line circuit with 50-kc sampling rate is 30 db at 800 cps which conforms well to the theoretical estimation.