Considering inter-picture dependencies when selecting transform coefficient levels in hybrid video coding can be done via formulating the decoding process as a linear signal model and solving a quadratic program. The basic method assumes motion estimation and quantization parameters as being given and then selects the transform coefficient levels. However, when motion vectors are determined in advance, motion estimation must be conducted using uncoded reference pictures which is known to deliver inferior results compared to motion estimation on decoded reference pictures. In this work, we expand the basic method to incorporate the case where the motion estimation is considering decoded reference pictures. We propose an approach that iterates between transform coefficient selection and motion estimation. We find that a simple two-pass iteration works reasonably well. Our simulation
results using an H.264/AVC-conforming encoder show coding gains up to 1 dB in comparison to the quantization method specified in the test model of H.264/AVC.
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