H.261 is an ITU video-coding standard, designed original to suit ISDN
lines. Its output bit rates is aimed to be multiples of 64Kbits/s. The
encoding algorithm employed is a mixture of temporal and spatial coding to remove the redundancies in the video. The resulting data rate was designed to be set between 40 Kbits/s and 2 Mbits/s. Motion vectors are used to help the codec compensates for motion.
The encoding algorithm used is similar to that of MPEG. However, H.261
has smaller computational power than MPEG. H.261 is constant-bit-rate
codec and not constant-quality, variable-bit-rate encoding. This is
because the encoding algorithm trades the picture quality against
motion. Hence, scenes having a large amount of motion will have lower quality than those having small amount of motion. Compared to MPEG picture types, it has I and P frames. The output stream is IPPPP...of encoded pictures (frames).
H.261 was targeted at teleconferencing applications and specially for face-to-face videophone applications and for videoconferencing. There are only two supported resolutions CIF (Common Interchange format), and QCIF (Quarter CIF) (see Table 3.1).