The DICOM Presentation Context consists of the Abstract Syntax (what information is exchanged) and Transfer Syntax (how it is encoded). The Transfer Syntax specifies the Byte ordering, Implicit or Explicit VR and compression. 

Vendors sometimes use new compression techniques as private Transfer Syntaxes, which sometimes create interoperability problems. Compression support is negotiated when setting up the DICOM Association.

Compression is essential for three reasons –
  1. To reduce the amount of storage needed for images when archiving.
  2. Certain applications, like cardiology and ultrasound, store images from a particular examination on a DICOM exchange media such as a CD or MOD disc. In order to fit a complete cardiology cine run on a single CD, compression is a requirement.
  3. Wide Area Network connections do not typically have the same bandwidth as in a radiology/ hospital campus network. When a regular chest x-ray or the most important slices of a CT exam are sent uncompressed over a regular, slow line, it could take up to half an hour or more for the images to arrive.

The trade-offs when using compression are performance loss (it takes CPU time and slows down workstations) and the impact on image quality.

There are two basic groups of compression schemes in use: lossless, which is used when the original image can be completely reconstructed from the compressed data, and lossy compression, causing some degree of information loss.

The fact that an image has been lossy compressed needs to be reflected in the DICOM image header using a special "compression flag" to prevent additional lossy compression, which would cause major image artifacts.

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