A new type of digital echo canceler for two-wire digital transmission is presented. The new principle estimates an echo signal by use of the arithmetic means estimate for each transmitted data pattern, which leads to relatively simple hardware. The principle is compared with adaptive digital filter methods through theoretical analysis and computer simulation. The results show that the proposed method has fast convergence property with respect to its hardware simplicity and that the convergence time is independent of echo level. Quantization effects are also analyzed.