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I’m new to setting up home theater, but have a background in data network engineering.
The home setup I’m building has my AVR separated from my TV. Instead of going with eARC, I thought I could use optical fiber to get audio from devices directly connected to my tv back to the AVR...until I learned that was a no-go for Atmos.

This was very surprising because I have always associated fiber with superior bandwidth, speed, and distance. Why doesn’t the same hold for optical audio? Furthermore, why isn’t optical the default for high speed/high bandwidth use cases in the AVR world? From what I’ve read, optical audio is slowly dying. Why does this industry want to stick with copper transport over fiber?
 

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It's not a cable limitation. The SPDIF standard used with optical connections was created long ago when PCM stereo and Dolby Digital were the primary formats. It was never updated to support the higher bitrate standards because HDMI had already displaced it. Plus HDMI supports copy protection which is desirable to the content providers.

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