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How does LED transfer data and how is it used in Communication? How does different colors of LEDs contribute, blue LEDs especially?

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Although some optical links (e. g., https://en.wikipedia.org/wiki/RONJA) use common LEDs, most optical communication employs infrared laser diodes to send a rapidly modulated signal through an optical fiber. See https://en.wikipedia.org/wiki/Fiber-optic_communication for more details.

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In the data communications industry we often use blue LEDs on the front panels of our equipment to communicate things like "link up" or "power on", because they look cool. Other than that, I can't think of any significant role they have in Communication.

Red LEDs are better suited to communication over plastic optical fiber because of lower cost and lower fiber losses at red wavelengths.

Infrared lasers are more often used long distance (over 10 m) fiber optic networks, due to higher modulation bandwidth (compared to LEDs) and lower attenuation and dispersion in the fiber (compared to visible wavelengths).

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