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Section 3.5.1, step 6, if the input buffer does contain a complete media segment (sub-step 2) but it does not contain a complete coded frame, then the coded frame processing algorithm is not run and at sub-step 4 the media segment bytes (containing the header) are removed. A possible fix would be to jump after sub-step 3 to the 'Need more data' step if the entire media segment is not in the input buffer. The media segment data is then not discarded (and step 6 is not executed) until the entire segment is received. This also obviates the need for the NOTE about incremental parsers.
I'll figure out a way to reword this. I just want to make it clear that coded frame processing may begin before the end of the segment is actually received. I also think that it is important to make it clear that once a coded frame is processed, the data is not necessarily still available in the input buffer. That is why the current algorithm removes media segment data as it goes.
Change committed https://dvcs.w3.org/hg/html-media/rev/15e7e8f7eecd I basically went w/ Mark's suggestions, but put the new step after sub-step 4 instead of sub-step 3 so that the SourceBuffer can signal that it can't accept more data.