AC-3 (short for Arc Consistency Algorithm #3) is a type of Dolby Digital audio format. And the Dolby Digital is the common version containing up to six discrete channels of sound. The most elaborate mode in common usage involves five channels for normal-range speakers(20 - 20,000 Hz) (right front, center, left front, right, left surround)and one channel (20 Hz - 120 Hz allotted audio) for the subwoofer driven low-frequency effects. Mono and stereo modes are also supported. AC-3 supports audio sample-rates up to 48 kHz.
Although commonly associated with the 5.1 channel configuration, Dolby Digital allows a number of different channel selections. The options are:
Mono (Center only)
2-channel stereo (Left + Right), optionally carrying matrixed Dolby Surround
3-channel stereo (Left, Center, Right)
2-channel stereo with mono surround (Left, Right, Surround)
3-channel stereo with mono surround (Left, Center, Right, Surround)
4-channel quadraphonic (Left, Right, Left Surround, Right Surround)
5-channel surrounding (Left, Center, Right, Left Surround,Right Surround)
These configurations optionally include the extra Low Frequency Effect (LFE) channel. The last two with stereo surrounds optionally use Dolby Digital EX matrix encoding to add an extra Rear Surround channel.
Many Dolby Digital decoders are equipped with down-mixing to distribute encoded channels to speakers. This includes such functions as playing surround information through the front speakers if surround speakers are unavailable, and distributing the center channel to left and right if no center speaker is available. When outputting to separate equipment over a 2-channel connection, a Dolby Digital decoder can optionally encode the output using Dolby Surround to preserve surround information.The '.1' in 5.1, 7.1 etc. refers to the LFE channel, which is also a discrete channel.
Generally speaking, DVD's audio is AC-3 or DTS format, which is featured 5.1 surround sound. When you play and watch DVD movie through the home theater system, this multi-dimensional audio effect will make you immersive feel the fantastic of DVD movie. Meanwhile, AC-3 and DTS audio format can also be converted and stored into video files like MPEG and AVI. When playback them on your media player, it can also achieve the 5.1 Dolby Digital Surround Sound.
AAC Knowledge from WikiPedia - Advanced Audio Coding (AAC) is an audio coding standard for lossy digital audio compression.
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