Zolle - MTS is based on MPEG2 Transport Stream, also called AVCHD (Advanced Video Codec High Definition.)
You can use Avidemux, free for Windows, Mac, and Linux, to convert it.
That will convert it to any of the usual formats, including MPEG2-PS (Program Stream), to make Compliant Std Definition or High Definition DVDs. Your PC/Mac needs an HD burner to create HD/Blu-Ray DVDs. A Standard burner will create Std Definition DVDs for NTSC (US, Japan), and PAL (rest of world), TV players and TVs.
It will convert to Standard Compliant MPEG4, H264 (MPEG4 AVC / Advanced Video Codec), Xvid4, and FLV - Flash, suitable for sharing or uploading.
You can use Avidemux to re-size - 1920 x 1080 to 1280 x 720, or to standard DVD format. Also to iPod, iPhone, Sony PS, and other small-frame MP4 player size.
Avidemux will re-sample Audio to 48,000Hz, needed for DVDs, in AC3, AAC, etc, formats.
It has Filters, to adjust video Brightness, Colour, De-Noise, Sharpness, and more. It can change frame-rates - 30fps to 25fps for PAL-DVD, etc.
You can make each setting, then Preview what it will do, without changing the video.
Avidemux can do basic editing, create "fades" at start/end of clips, and Append (join) them.
It will Select/Extract parts of videos in same format, or change the format of selections.
You can use Avidemux to Extract Audio only, from clips, videos or movies.
The kids and young folk here use that to extract the AAC/AC3-etc "good quality" (non MP3) - audio from videos they download from a certain tubular-name site, and others, and from those make *.mp3 and *.ogg files to use in their hand-helds. That, however, might be a "non-approved" activity in some regions, so it would be wise to check legality for region before so doing...