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This paper addresses the rate allocation problem for wireless video streaming. Results from a simple subjective viewing test indicate that perceptually preferred allocation can be closely approximated by minimizing the total mean-squared-error (MSE) distortion of all participating streams. This finding motivates the design of a distributed media-aware rate allocation protocol, which achieves the optimal solution by allowing cross-layer information exchange between the video end hosts and relaying wireless nodes. Various network simulation results confirm the effectiveness of the proposed scheme, which consistently outperforms conventional media-unaware TCP-friendly Rate Control (TFRC).