The predicted wordlength assignment system (PWA) is a digital speech interpolation method which avoids speech clipping and freeze-out distortion. Inactive sources are excluded by a speech detector. The active speech signals are coded with variable wordlengths (3-8 bits) at a sampling rate of 8 kHz. In an overload case, all active sources are still served, but at reduced wordlength. The required wordlength is calculated using only the signal history, which is also available at the receiver. Therefore, no auxiliary information about the individual wordlength is transmitted. A system with up to 128 telephone conversation speech sources has been studied using computer simulation. The signal-to-noise ratio (SNR) is employed to describe speech quality. With an input of 128 sources (40 percent activity) and a transmission rate per source of 21 kbits/s, an SNR of 34 dB can be achieved. Above a bit rate of 16 kbits/s, distortions are not audible. As a first step towards implementation, a specially designed fast microprocessor has been used to simulate the most important PWA system functions, such as speech detection, linear prediction, and coding algorithm.