We formulate quantum rate-distortion theory in the most general setting whereclassical side information is included in the tradeoff. Using a naturaldistortion measure based on entanglement fidelity and specializing to the caseof an unrestricted classical side channel, we find the exact quantumrate-distortion function for a source of isotropic qubits. An upper bound webelieve to be exact is found in the case of biased sources. We establish thatin this scenario optimal rate-distortion codes produce no entropy exchange withthe environment of any individual qubit.
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