Audio compression is the technique used to reduce the size of audio data thereby reducing the amount of data bits required to transmit it such that there is negligible impact on the quality of audio being played. MPEG (Motion Picture Expert Group) has been widely used in consumer electronics, digital audio broadcasting, DVD and movies etc. for audio compression. In this technique, the audio signal is first sampled and quantized(key attribute) using PCM, PCM samples are then divided up into 32 frequency sub-bands using DFT and psychoacoustics model (removes irrelevant audio) is used in bit allocation. If the amplitude of signal in band is below the pre-defined masking threshold, signal is not encoded. Otherwise, bits are allocated based on the sensitivity of the signal. MPEG defines 3 levels of processing layers for audio Level 1, Level 2 and Level 3 each with increasing levels of sophistication, Greater compression ratios and Greater computation expense.