A proper coding of background sounds has proven to be important in digital cellular telephone systems. It is therefore of considerable interest to find methods that improve also background sound coding, in particular in medium and low bitrate speech coders. In many coders operating around 8 kbps, one signifi cant effect has been a swirling distortion when coding for example smooth car noise. The paper discusses the origin of this problem, and presents an algorithm that reduces swirling, giving a significant overall perceptual improvement, as shown by field tests in commercial D-AMPS systems in the US. A related new algorithm for error concealment is also pre sented. This method makes it possible to perceptually remove the effect of fading dips persisting for a few sec onds, during nonspeech periods.