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This paper presents a novel scheme, Layered Internet Video Engineering (LIVE), in which network nodes feedback virtual congestion levels to video senders to assist both media-aware bandwidth sharing and transient loss protection. The video senders respond to such feedback by adapting the rates of encoded H.264/SVC streams based on their respective video rate-distortion (R-D) characteristics. The same feedback is employed to calculate the amount of forward error correction (FEC) protection for combating transient losses. Simulation studies show that LIVE can minimize the total distortion of all participating video streams and hence maximize their overall quality. At steady state, video streams experience no queuing delays or packet losses. In face of transient congestion, the network-assisted adaptive FEC effectively protect video packets from losses while keeping a minimum overhead. Our theoretical analysis further guarantees system stability for arbitrary number of streams with arbitrary round trip delays below a prescribed limit. Finally, we show that LIVE streams can coexist with TCP flows within the existing explicit congestion notification (ECN) framework.