QUOTE(Dogbert @ Jan 25 2007, 16:22)

That would be all jolly and fine, except for two things:
a) the diameter of industrial grade glass fibre cables is way, way smaller than the diameter of the TOSLink stuff => the LEDs can't radiate their signal effectively into the cable => you're screwed.
Unless the diameter of the fiber optic cable is less than 1/2 the wavelength of the light transmitted, it will have no effect. As all the fiber we are talking about is measured in
millimeters micrometers, this is not an issue.
The issue is fiber alignment, which is handled by the thingamaboodle at the end of the Toslink. It makes sure the fiber is lined up optimally with the LED, and there is a fair amount of leeway here.
In any case, high quality fiber comes in many diameters, and all the up market optical cables I've seen use a larger than standard diameter cable.
Why does larger help? From what I understand, It only matters in tight turns, in which the light is more likely to travel along an optimal path - as opposed to hitting the outside of tight turn and being lost to internal reflection.
QUOTE(Dogbert @ Jan 25 2007, 16:22)

b) the SNR of a 5m long TOSLink is still high enough for a perfect reconstruction of the signal. A better cable won't do jack s..t
Not necessarily.
High quality glass fiber is very uniform both in crystal structure and density. Coherent light is conducted uniformly with minimal dispersion.
Plastic optical cable, on the other hand is rife with imperfections - wavy structures, bubbles and areas of increased density.Plastic is getting better but at the quality we are buying, no where near the equal of glass.
From what I understand, these imperfections have two effects: to disperse the coherent light in many directions, and at density interfaces, effectively slow down the light by altering the angle if incidence (think light bending when going from air to water.)
Edit: Plastic also tends to micro fracture far more easily than glass fiber. These fractures are both density interfaces and random angle refractors. (I believe the reason for this is that glass is a liquid, and its crystals can flow to some extent, but I could be wrong)
In a real time one way system, this can introduce errors, both in data content and timing. To the extent possible, the DAC corrects these by interpolation and educated guessing.
I have also read that there is something akin to a "skin effect" with glass fiber, such that , unlike with plastic fiber, on the inside of outer surface of the glass fiber, light tends not to be reflected at random angles. This helps maintain a coherent signal, though I admit I do not understand the physics of this.