During the development of H.263, the target bit-rate was determined by the maximum bit-rate achievable at the general switched telephone network (GSTN), which was 28.8 Kbits/sec at that time. At these bit-rates, it was necessary to keep the overhead information at a minimum.

The other requirements of H.263 standardization were:

• Use of available technology
• Interoperability between the other standards, like H.261
• Flexibility for future extensions
• Quality of service parameters, such as resolution, delay, frame-rate etc.
• Subjective quality measurements.

Based on all these requirements an efficient coding scheme was designed. Although it was optimized for 28.8 Kbits/sec, even at higher bit rates up to 600 Kbits/sec, H.263 outperformed the H.261 standard.

26.5 Picture formats of H.263 The H.263 standard supports five pictures formats

• Sub-QCIF 128 x 96 pixels (Y), 64 x 48 pixels ( U,V)
• QCIF 176 x 144 pixels (Y), 88 x 72 pixels (U,V)
• CIF 352 x 288 pixels (Y), 176 x 144 pixel (U,V)
• 4CIF 704 x 576 pixels (Y), 352 x 288 pixel (U,V)
• 16 CIF 1408 x 1152 pixels (Y), 704 x 576 pixel (U,V)

The CIF, 4CIF and 16 CIF picture formats are optional for encoders as well as decoders. It is mandatory for the decoders to support both sub-QCIF and QCIF picture formats. However, for encoders, only one of these two formats (Sub-QCIF or QCIF) is mandatory. In all these formats Y, U and V are sampled in 4: 2:0.

Improved features of H.263 over H.261

The H.263 offered several major improvements over its predecessor H.261. Some of these are :

Half – pixel motion estimation: In H.261, the motion vector were expressed in integer pixel units. This often poses a limitation in motion compensation, since one pixel resolution is often too crude to represent real world motion. Half-pixel motion estimation is explained in the next sub section.

Unrestricted motion vector mode: In the default prediction mode of H.263, all motion vectors are restricted so that the pixels referenced by them lie within the coded picture area. In the unrestricted motion vector mode, this restriction is removed and the motion vectors are allowed to point outside the picture.

Advanced prediction mode: This is an optional mode that supports four motion vectors per macro block and overlapped block motion compensation (OBMC).

PB-frames mode: This increases the frame-rate without significantly increasing the bit-rate. The concept is explained in a later sub-section.

Syntax based arithmetic coding (SAC) mode: This mode achieves a better compression, as compared to Huffman coded VLC tables.