High-speed digital data transmission services with mobile equipment are becoming available. Though the visual signal is one of the expected media to be used with such transmission capabilities, the bandwidth of visual signal is much broader than the provided transmission bandwidth in general. Therefore efficient video encoding algorithms have to be introduced. The ITU-T Recommendation H.263 and ISO/IEC MPEG-4 are very powerful encoding algorithms for a wide range of video sequences. But a large amount of bits are generated in highly active scenes to encode them using such conventional methods. This results in frame skipping and degradation of decoded picture quality. In order to keep these degradations as low as possible, we proposed a Dynamic Resolution Conversion (DRC) method of the prediction error. In the method, a reduced resolution encoding is carried out when the input scene is highly active. Simulation results show that the proposed scheme can improve both coding frame rate and picture quality in a highly active scene. We also present in this paper that some analysis for the performance of the DRC method under the error prone environment that is inevitable with mobile communications.