BH206 HAD AN ERRONEOUS ATC RADAR ALT READOUT.

Narrative

I WAS FLYING UNDER THE FLOOR OF THE CLASS B AIRSPACE USING ONE OF OUR COMPANY'S DISCRETE XPONDER CODES AND OPERATING WITH MODE C. AFTER LNDG AND THEN DEPARTING FROM A NEARBY HELIPORT; I CONTACTED ATC TO INFORM THEM OF MY INTENTIONS TO LAND AT THE PRIMARY ARPT WITHIN CLASS B AIRSPACE. ATC GAVE ME A NEW SQUAWK CODE; GRANTED ME A CLRNC TO ENTER THE CLASS B AIRSPACE AND NOTED A DISCREPANCY BTWN MY ACTUAL ALT AND WHAT MY ENCODER WAS INDICATING (THE ENCODER WAS INDICATING APPROX 600-700 FT HIGHER THAN MY ACTUAL ALT). ATC INSTRUCTED ME TO 'STOP ALT SQUAWK' WHICH I DID. THEY DID NOT SEEM TO BE OVERLY TROUBLED/UPSET WITH MY ERRONEOUS ENCODER BUT I WORRY THAT IT MAY HAVE CAUSED SOME CONCERN REGARDING APPARENT AIRSPACE VIOLATIONS AND FOR SOME OVERFLYING ACFT PRIOR TO IT BEING NOTICED BY ATC. HAVING SOME TYPE OF COCKPIT DISPLAY OF ENCODER ALT OR BY HAVING ATC DO AN 'ENCODER CHK' ON A PERIODIC BASIS (IE; MORE OFTEN THAN THE 24 MONTH FAR 91.411 AND 91.413 CHKS) MAY HAVE HELPED IN DISCOVERING THE ENCODER ERROR PRIOR TO ME GETTING NEAR THE CLASS B AIRSPACE.