Abstract: In a digital encoder, truncation is controlled by the fullness of the output rate-smoothing buffer. A signal compression system is shown for processing a stream of fixed length digital sample signals, such as audio signals, which system includes a linear digital compression filter for compression filtering the sample signal stream and generating a stream of compression-filtered signals. The compression-filtered stream is encoded by an encoder which implements a variable word length truncated code. The encoder output is supplied to a buffer for transmission to a communication channel. The encoder is controllably operable in a normal mode and in an out of range (OOR) mode. In the OOR operating mode an OOR code word together with the compression filtered signal is sent to the buffer. Buffer underflow is controlled by operation in the OOR mode when the buffer is empty or near empty.