Digital video traffic is inherently bursty for two reasons: inherent motion of objects and cameras, and the artifacts of compression algorithms. Because digital video playback requires bandwidth guarantees from the underlying 1/0 and network systems, the bursty nature of video traffic forces the bandwidth reservations to be made a t the level of peak data rates rather than average data rates. This work addresses the burstiness problem in digital video traffic by proposing changes to the MPEG compression/decompression algorithm.The resulting algorithm, block-by-block (BBB) difference coding, successfully minimizes the difference between peak and average bit rates by a factor of 2 to 3 in average, without compromising the compression e f iciency, coding speed and video quality.