Statistical multiplexing is a type of communication link sharing, very similar to
dynamic bandwidth allocation (DBA). In statistical
multiplexing, a communication channel is divided into an arbitrary number of variable
bit-rate digital channels or data streams. The link sharing is adapted to the instantaneous traffic demands of the data streams that are transferred over each channel. This is an alternative to creating a fixed sharing of a link, such as in general
time division multiplexing (TDM) and
frequency division multiplexing (FDM). When performed correctly, statistical multiplexing can provide a link utilization improvement, called the
statistical multiplexing gain.