I used to live on a cable car line in San Francisco, and did not notice the continuous low-pitched whine of the pulleys until the cable stopped at 2 a.m. thereby waking me up. In other words, we are sensitive to changes in what we otherwise expect to be unchanging. Whatever the reason, a varying hiss level behind music is much more disturbing than a fixed one, even if the noise only rises to a level which was not very obtrusive in the first place. Any audible changes in the apparent hiss, however small, are immediately perceived as unnatural, something which wasn't a part of the original performance. Therein lies the paradox of the simple wide-band compander system.
Noise modulation is inevitable.
It could only be innocuous if the highest noise level ever reached in the presence of a loud signal is in itself inaudible. To put it another way, if without the NR system noise is at any time audible in the presence of loud signals, with it you will be able to hear noise modulation. However, there are alternative design approaches which are not susceptible to noise modulation. Watch this space. Dolby Laboratories Inc. All rights reserved.