In a cable return path system, a method for performing digital companding adds a predetermined offset to the digital value to be companded, and employs a modified µ-law or a-law companding technique to obtain a reduced bit length digital value. One embodiment of this modified approach adds a predetermined offset (e.g., 129 for a 12-bit implementation) to the digital value before companding and then employs a two-bit chord and a 5-bit step for the 12-bit implementation. The end result is that the performance metrics are not significantly compromised by this bit reduction when compared to current transmission methods without this technique.