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It is possible to detect the presence of transmission errors in the decoded sample sequence of a differential pcm system. The detection procedure is based on the sample-to-sample differences in the received signal. It infers an error whenever an individual difference is substantially greater than the rms difference. On the detection of an error, the sample affected is replaced by the result of a smoothing procedure and subsequent samples are adjusted to compensate for the error propagation inherent in differential pcm. This difference detection and correction (DDC) scheme substantially improves system performance at high error rates.