Differential pulse-code modulation (DPCM) has been proposed as a practical encoding scheme for speech, television, and telemetry signals. In this paper, the mean-square error for DPCM systems is derived, and its minimization by proper choice of system variables is examined. A simple analytical method is then presented for optimizing the system bandwidth

, the number of quantization bits

, and the parameters of the DPCM feedback network when the input is a speech signal and channel noise is negligible. A method is then developed for measuring the subjective quality of voice communication systems as a function of an arbitrary number of system parameters. The method was used to measure the quality of PCM speech and DPCM speech as a function of

and

. Quantization was logarithmic, the sampling rate

, and channel noise was assumed negligible. Optimum

and

were found for every bit rate

. For both PCM and DPCM, the equations relating the optimum

and

are of the form

, where

and

are constants independent of

. The maximum speech quality obtainable for PCM and DPCM was found as a function of

, and the reduction in bit rate resulting when optimum DPCM rather than optimum PCM is used was determined as a function of

and as a function of the speech quality. Included in the paper is a brief description of the realtime DPCM systems used in the research.