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Differentiated Services (DiffServ) is one of the leading architectures for providing quality of service in the Internet. We propose a scheme for real-time video transmission over a DiffServ network that jointly considers video source coding, packet classification, and error concealment within a framework of cost-distortion optimization. The selections of encoding parameters and packet classification are both used to manage end-to-end delay variations and packet losses within the network. We present two dual formulations of the proposed scheme: the minimum distortion problem, in which the objective is to minimize the end-to-end distortion subject to cost and delay constraints, and the minimum cost problem, which minimizes the total cost subject to end-to-end distortion and delay constraints. A solution to these problems using Lagrangian relaxation and dynamic programming is given. Simulation results demonstrate the advantage of jointly adapting the source coding and packet classification in DiffServ networks.