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Future video services in the loop plant may be based on digital transmission through optical fibers. A small and inexpensive codec is required for a variety of services based on digital television. We have demonstrated a compression algorithm for transmission of NTSC color television over a DS3 channel (44.736 Mbits/s). This predictive coding algorithm has been implemented using circuits built with conventional TTL logic. The resulting picture is visually unimpaired, but may not have network quality. The major portion of the compression or reconstruction circuit has also been implemented in one CMOS VLSI chip. Compression is accomplished using this chip with two small ROM chips. Reconstruction is done with the same VLSI chip and one ROM chip.