Introduction 

    H.263 is a video compression algorithm and protocol which is standardized by ITU. It is
due to be published sometime in 1995/1996. It was designed for low bitrate communication,
early drafts specified datarates less than 64 Kbits/s, however this limitation has now been
removed. It is expected that the standard will be used for a wide range of bitrates, not just
low bitrate applications, and expected that H.263 will replace H.261 in many applications.

    The video source coding algorithm of H.263 is based on Recommendation H.261 and is
a hybrid of inter-picture prediction to utilize temporal redundancy and transform coding of
the remaining signal to reduce spatial redundancy, however with some changes to improve
performance and error recovery. So, In comparison with video compression H.261 which
is widely used for ISDN video conferencing, H.263 can achieve the same quality as H.261
with 30-50% of the bit usage. Most of this is due to the half pixel prediction and negotiable
options in H.263. H.263, in addition, is also better than MPEG-1/MPEG-2 for low resolutions
and low bitrates.

    The differences between the H.261 and H.263 coding algorithms are listed
below.
Half pixel precision is used for motion compensation whereas H.261 used full pixel precision and a loop filter.
Some parts of the hierarchical structure of the datastream are now optional, so the codec can
be configured for a lower datarate or better error recovery. There are now four optional
negotiable options included to improve performance:
Unrestricted Motion Vectors
Syntax-based arithmetic coding
Advance prediction
P-B frames.
    However, H.263 supports five resolutions. In addition to QCIF and CIF that were
supported by H.261 there is sub-QCIF, 4CIF, and 16CIF. sub-QCIF is approximately
half the resolution of QCIF. 4CIF and 16CIF are 4 and 16 times the resolution of CIF
respectively. The support of 4CIF and 16CIF means the codec could then compete with
other higher bitrate video coding standards such as the MPEG standards.

An outline block diagram of the codec is given in Figure 1.