The induction of the asynchronous transfer mode (ATM) concept may significantly influence the coding of video services for broadband networks. The authors show how the absence of a physical channel structure and the ability to switch bursty traffic can be used to enhance video coding. Packetization defects and their impact on picture quality, coding algorithms, and synchronization schemes are studied. The authors describe variable-bit-rate coding and report on the results obtained with a hardware implementation of a variable-bit-rate video codec. Statistical multiplexing gain figures are given. The influence of cell loss on image quality is discussed and simulation results are given. A layered coding model offering good cell loss concealment properties and high flexibility is described.>