The H.263 Recommendation specifies a coded representation that can be used for compressing the moving picture components of audio-visual services at low bit rates. Detailed specifications of the first generation of this codec under the test model (TM) to verify the performance and compliance of this codec were finalised in 1995 [1]. The basic configuration of the video source algorithm in this codec is based on ITU-T Recommendation H.261, which is a hybrid of interpicture prediction to utilise temporal redundancy and transform coding of the residual signal to reduce spatial redundancy. However, during the course of the development of H.261 and the subsequent advances on video coding in MPEG-1 and MPEG-2 video codecs, substantial experience was gained, which has been exploited to make H.263 an efficient encoder [2 4]. In this Chapter those parts of the H.263 standard that make this codec more efficient than its predecessors will be explained.

It should be noted that the primary goal in the H.263 standard codec was coding of video at low or very low bit rates for applications such as mobile networks, the public switched telephone network (PSTN) and narrowband ISDN. This goal could only be achieved with small image sizes such as subQCIF and QCIF, at low frame rates. Today, this codec has been found so attractive that higher resolution pictures can also be coded at relatively low bit rates. The current standard recommends operation on five standard pictures of the CIF family, known as subQCIF, QCIF, CIF, 4CIF and 16CIF.