Another of Dolby Labs’ sound encoding schemes. Dolby AC-2 is a perceptually based adaptive transform coding algorithm that combines very high audio quality with a low bit rate, thus substantially reducing the data capacity required in such applications as satellite and terrestrial links and digital audio storage media. The digital algorithm developed by Dolby uses a multi-band approach to take advantage of psychoacoustic masking. A bit allocation scheme based on 80% fixed allocation and 20% adaptive allocation keeps the complexity of the codec relatively low. Dolby both manufactures professional codecs incorporating AC-2 (such as Dolby FAX) and licenses the technology to other manufacturers for inclusion in their products.