We are studying methods that operate in the spatial domain in which the edges can be easily identified and treated appropriately. Here we present two techniques. Each uses some form of segmentation either on the interframe signal, the intraframe signal or both, combined with some form of interpolation. The two techniques will be presented, and their relative merits discussed, together with a comparison with the DCT. The comparisons show that although in high bit rate coding the transform technique performs generally better, in low bit rate applications such as videotelephony the segmentation techniques produce more acceptable results. This is because, unlike DCT coding, segmented coding preserves the perceptually important image edges, which form a major part of the structure of the image, particularly at very low bit rates.