1. A method for operating a video communication system at a local site, the method comprising the steps of: determining initial privacy settings for a video communication event; establishing a video communication link with a video communication system at a remote site; capturing video images of a field of view of at least one image capture device, and transmitting the video images in accordance with the initial privacy settings; using a scene analysis algorithm to automatically determine a video context based at least in part upon a determined contextual classification for the communication event based upon the video images; determining a video context based upon the contextual classification and the video images; automatically determining new privacy settings in accordance with the determined video context; analyzing the captured video images to identify privacy sensitive areas in the captured video images, using a scene analysis algorithm which examines a content of the video images and image context characteristics of the video images based upon the determined privacy settings; modifying the image characteristics in the identified privacy sensitive image areas in the captured video images, to control the image and image context characteristics shared with the remote viewer, to an extent consistent with the determined privacy settings; and transmitting the modified video images to the remote site.