6. The method as claimed in claim 4 wherein step (b) comprises determining a size of an alphabet used in said file based on said determined file categorization criteria and then assigning an initial context length equal to a number of bits based on the number of bits needed to encode all elements of said alphabet; and wherein the initial context set is derived based on the initial context length.
4. The method as claimed in claim 3 wherein step (d) comprises applying a grouping function g to the set of contexts to combine the contexts into a smaller set of contexts.