In lower termites, cellulose (the main component of wood) is digested by protozoans living in their hindgut. These protozoans produce cellulase enzymes that break down cellulose into simpler compounds that termites can absorb. Higher termites lack protozoans and rely solely on bacteria and their own enzymes. Option C (both) is incorrect because the question specifically asks about termites in general, where protozoans are the distinctive answer.