Abstract: This paper presents a new, lossy texture compression technique that is suited to implementation on low-cost, low-bandwidth devices as well as more powerful rendering systems. It uses a representation that is based on the blending of two (or more) `low frequency' signals using a high frequency but low precision modulation signal. Continuity of the low frequency signals helps to avoid block artefacts. Decompression costs are kept low through use of fixed-rate encoding and by eliminating indirect data access, as needed with Vector Quantisation schemes. Good quality reproduction of (A)RGB textures is achieved with a choice of 4bpp or 2bpp representations.