Why should I use MPEG-2 AAC rather than Dolby AC-3?

AAC is a state-of-the-art audio compression algorithm that provides compression superior to that provided by older algorithms such as AC-3. AAC and AC-3 are both transform coders, but AAC uses a filterbank with a finer frequency resolution that enables superior signal compression. AAC also uses a number of new tools such as temporal noise shaping, backward adaptive linear prediction, joint stereo coding techniques and Huffman coding of quantized components, each of which provide additional audio compression capability. Furthermore, AAC is much more flexible than AC-3, in that AAC supports a wide range of sampling rates and bitrates, from one to 48 audio channels, up to 15 low frequency enhancement channels, multilanguage capability and up to 15 embedded data streams.

When should I use AAC rather than MPEG-2 BC?

Both provide 5-channel audio coding capability, however AAC provides a factor of two better audio compression relative to MPEG-2 BC, and is appropriate in all situations in which backward compatibility is not required or can be accomplished with simulcast. An MPEG-1 two channel decoder can decode an MPEG-2 BC 5-channel bitstream. AAC has no such backward compatibility requirement and, for 5-channel audio signals, has been shown in MPEG formal listening tests to provide slightly better audio quality at 320 kb/s than MPEG-2 BC can provide at 640 kb/s.