• It is observed that the resulting sampled PCM signal has a high correlation between the adjacent samples.

• It is observed that generally the signal does not change rapidly from one sample to the next.

• Therefore the difference in amplitudes of adjacent samples is very small.

• When these highly correlated samples are encoded using a PCM system, the resulting encoded PCM signal contains redundant information. Redundant bits do not contain any new information.

• By removing this redundancy before encoding, we can obtain a more efficiently coded signal.

• The DPCM system operates on this principle In DPCM system a special circuit called "predictor“ is used.

• The "predictor" can actually predict the values of the future samples of signal. This helps in reducing the redundancy.

• Hence we can predict the range of next required increment or decrement in sample at the predictor output, if we know the past sample value.

• Therefore to encode this small value the DPCM system requires less number of bits which will ultimately reduce the bit rate.

• This is the role predictor in DPCM system.

• The samples that are highly correlated, when encoded by PCM technique, leave redundant information behind. To process this redundant information and to have a better output, it is a wise decision to take predicted sampled values, assumed from its previous outputs and summarize them with the quantized values.

• Such a process is named as Differential PCM technique.