Microsoft Point-to-Point Compression
Encyclopedia
Microsoft Point-to-Point Compression (described in RFC 2118) is a streaming data compression algorithm based on an implementation of Lempel–Ziv using a sliding window buffer. According to Hifn
Hifn
Hifn is a semiconductor manufacturer founded in 1996 as a spin-off from Stac Electronics. The company is headquartered in Los Gatos, California, and has offices in North America, Europe and Asia. It is active in the market of security processors...

's IP statement, MPPC is patent-encumbered.

Where V.44 or V.42bis operate at layer 1 on the OSI model
OSI model
The Open Systems Interconnection model is a product of the Open Systems Interconnection effort at the International Organization for Standardization. It is a prescription of characterizing and standardizing the functions of a communications system in terms of abstraction layers. Similar...

, MPPC operates on layer 2, giving it a significant advantage in terms of computing resources available to it. The dialup modem's in-built compression (V.44 or V.42bis) can only occur after the data has been serially transmitted to the modem, typically at a maximum rate of 115,200 bit/s. MPPC, as it is controlled by the operating system, can receive as much data as it wishes to compress, before forwarding it on to the modem.

The modem's hardware must not delay data too much, while waiting for more to compress in one packet, otherwise an unacceptable latency
Lag
Lag is a common word meaning to fail to keep up or to fall behind. In real-time applications, the term is used when the application fails to respond in a timely fashion to inputs...

 level will result. It also cannot afford to, as this would require both sizable computing resources (on the scale of a modem) as well as significant buffer RAM. Software compression such as MPPC is free to use the host computer's resources which will typically include a CPU of several hundred megahertz and several hundred megabytes of RAM; Greater computing power than the modem by several orders of magnitude. This allows it to keep a much larger buffer to work on at any one time, and it processes through a given amount of data much faster.

The end result is that where V.44 may achieve a maximum of 4:1 compression (230 kbit/s) but is usually limited to 115.2 kbit/s, MPPC is capable of a maximum of 8:1 compression (460 kbit/s). MPPC also, given the far greater computing power at its disposal, is more effective on data than V.44 and achieves higher compression ratios when 8:1 isn't achievable.
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