8870 is not a DTMF encoder , Its a DTMF DECODER.
I have tried MT8880 and it worked awesome.
Its even easy to generate the dtmf tones..
Just by applying different binary combinations to the data pins u can generate various dtmf tones.
8880 also acts as a decoder.
Thats why the 8880 IC is called as DTMF TRANSCEIVER. ( TRANSMIT + RECEIVE )
For generating the binary code words u can go for the following methods :
1.Use a microcontroller to generate the bits.
2.or try some logic circuits.
3.or just set the bits high or low by directly the data pins to the power supply(logic 1) or to the ground (logic 0).
Hope this helps.