Abstract: The invention features a method of transmitting a digital signal which includes frames of frequency coefficients arranged in bands. For each frame, the method includes generating a spectral estimate of the energy in each of the bands, a class value that corresponds to the energy in a band relative to the average energy in the other bands for each of the bands, and a step size for each of the frequency coefficients based on the spectral estimate for the corresponding band. The step size varies with the energy in the band so that the step size for a frequency coefficient in a band having relatively high energy is larger than the step size for a frequency component in a band having relatively low energy. The frequency coefficients are then quantized, based on the relationship between the value of the frequency coefficient, the corresponding class value, and the corresponding step size, to produce quantized frequency coefficients.