Iterative joint source-channel decoding (ISCD) allows to exploit residual source redundancy for error correction. Residual redundancy results from a mismatch between the source statistics and the source code, and may be accidental or designed. This paper considers sources with memory encoded with a variable-length code (VLC) designed for a marginal statistic. In particular, a well-known soft-in-soft-out (SISO) VLC decoder is extended to differentially encoded sources and evaluated for different levels of source correlation. There exist operating conditions under which it is better to leave the redundancy in the source code, rather than remove it by differential encoding. This shows that the source and channel encoder designs should be carefully chosen in order to obtain the best graceful degradation performance that ISCD can offer.
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