This paper presents a novel perceptual audio coding scheme which allows for scalable coding of stereo signals. The system provides the capability to decode mono or stereo output signals of various quality levels from specific sub-sets of the scalable bitstream. This permits falling back to a lower quality or a monophonic signal if the channel capacity is too low to transmit the full information. The described system is part of the Final Committee Draft of the upcoming MPEG-4 Audio standard.
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