The μ-law algorithm (sometimes written mu-law, often abbreviated as u-law) is a companding algorithm, primarily used in 8-bit PCM digital telecommunications systems in North America and Japan. It is one of the two companding algorithms in the G.711 standard from ITU-T, the other being the similar A-law. A-law is used in regions where digital telecommunication signals are carried on E-1 circuits, e.g. Europe.
The terms PCMU, G711u or G711MU are used for G711 μ-law.
Companding algorithms reduce the dynamic range of an audio signal. In analog systems, this can increase the signal-to-noise ratio (SNR) achieved during transmission; in the digital domain, it can reduce the quantization error (hence increasing the signal-to-quantization-noise ratio). These SNR increases can be traded instead for reduced bandwidth for equivalent SNR.
At the cost of a reduced peak SNR, it can be mathematically shown that μ-law's non-linear quantization effectively increases dynamic range by 33 dB or 5+1⁄2 bits over a linearly-quantized signal, hence 13.5 bits (which rounds up to 14 bits) is the most resolution required for an input digital signal to be compressed for 8-bit μ-law.