The points Kijanki made about timing, jitter, and reflections on impedance boundaries merit added emphasis and explanation, imo.
The S/PDIF and AES/EBU interfaces which are most commonly used to transmit data from transport to dac are inherently prone to jitter, meaning short-term random fluctuations in the amount of time between each of the 44,100 samples which are converted by the dac for each channel in each second (for redbook cd data).
As Kijanki stated, "Jitter creates sidebands at very low level (in order of <-60dB) but audible since not harmonically related to root frequency. With music (many frequencies) it means noise. This noise is difficult to detect because it is present only when signal is present thus manifest itself as a lack of clarity."
One major contributor to jitter is electrical noise that will be riding on the digital signal. Another is what are called vswr (voltage standing wave ratio) effects, that come into play at high frequencies (such as the frequency components of digital audio signals), which result in reflection back toward the source of some of the signal energy whenever an impedance match (between connectors, cables, output circuits, and input circuits) is less than perfect.
Some fraction of the signal energy that is reflected back from the dac input toward the transport output will be re-reflected from the transport output or other impedance discontinuity, and arrive at the dac input at a later time than the originally incident waveform, causing distortion of the waveform. Whether or not that distortion will result in audibly significant jitter, besides being dependent on the amplitude of the re-reflections, is very much dependent on what point on the original waveform their arrival coincides with.
Therefore the LENGTH of the connecting cable can assume major importance, conceivably much more so than the quality of the cable. And in this case, shorter is not necessarily better. See this paper, which as an EE strikes me as technically plausible, and which is also supported by experimental evidence from at least one member here whose opinions I respect:
http://www.positive-feedback.com/Issue14/spdif.htmFactors which determine the significance of these effects, besides cable length and quality, include the risetime and falltime of the output signal of the particular transport, the jitter rejection capabilities of the dac, the amount of electrical noise that may be generated by and picked up from other components in the system, ground offsets between the two components; the value of the logic threshold for the digital receiver chip at the input of the dac; the clock rate of the data (redbook or high rez), the degree of the impedance mismatches that are present, and many other factors.
Also, keep in mind that what we are dealing with is an audio SYSTEM, the implication being that components can interact in ways that are non-obvious and that do not directly relate to the signal path that is being considered.
For instance, physical placement of a digital component relative to analog components and cables, as well as the ac power distribution arrangement, can affect coupling of digital noise into analog circuit points, with unpredictable effects. Digital signals have substantial radio frequency content, which can couple to other parts of the system through cables, power wiring, and the air.
All of which adds up to the fact that differences can be expected, but does NOT necessarily mean that more expensive = better.
Regards,
-- Al
P.S: I am also an EE, in my case having considerable experience designing high speed a/d and d/a converter circuits for non-audio applications.