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This paper presents improvements on the classical model which produces speech that is significantly better than currently available systems. The first major improvement results from treating speech as a two source phenomenon that can be separated for parallel but independent analysis/ synthesis. This two component decomposition is accomplished by making use of the quasi-periodic nature of 'voiced' speech. The second major improvement in bit compression and robustness of operation results from an efficient encoding of the prediction residuals of the two components. The key step is to encode the residual of the periodic component by picking out and transmitting the essential information for only one cycle (pitch period) of the residual.