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We propose the phone-dependent channel compensated hidden Markov model (PDCC-HMM) for telephone speech recognition. The PDCC-HMM is derived by modifying the conventional hidden Markov model (HMM) with the phone-dependent channel compensation vectors. The telephone speech is recognized efficiently by using the derived PDCC-HMM. Experiments demonstrate the robustness of PDCC-HMM in speech recognition and show the significant reduction of recognition error rate by 50% compared to the conventional HMM method.