AC-3 is a proprietary digital compression scheme developed and licensed by Dolby Laboratories. The Dolby Digital audio format uses AC-3 to compress multiple channels of information into the space normally occupied by one channel. In this effort, some of the information in a movie or audio soundtrack is essentially “thrown away.” While this may sound offensive (and indeed some people do find this subject very touchy), the discarded information is carefully selected to ensure that the overall sound quality is not degraded or degraded to an absolute minimum.

The process of eliminating information is done by essentially discarding sounds the human ear cannot discern. For instance, in a movie scene where a large explosion occurs at the same time a cricket is chirping, we will not hear the cricket chirp (it is a small sound that is drown out by the much larger sound of the explosion – think how difficult it can be to hear someone speak when you’re mowing the lawn or listening to loud music). The AC-3 decoding scheme (as with other similar “perceptual coding” schemes) discards the data of the cricket chirp since we cannot hear it over the explosion. In this manner, the overall signal size is decreased while there is no perceptible (or noticeable) degradation in quality. We don’t miss the cricket chirp since we could not hear it even when it was there and thus the sound quality is not degraded. AC-3 does this over many spectrum bands in each channel, eliminating up to 80% of the information. However, the information eliminated is information unheard thus maintaining a high sound quality. Through careful coding, six channels of digital sound can occupy the space needed for one non-coded channel.