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To ensure that fiber-optic connections have sufficient power for correct operation, you need to calculate the link's power budget, which is the maximum amount of power it can transmit. . Power budget refers to the amount of loss that a datalink (transmitter to receiver) can tolerate in order to operate properly. The transmitter and the receiver have minimum and maximum values and when you calculate the power budget, you use a worst-case analysis to provide a margin of error, even though all the parts of an actual system do not operate at the worst-case levels. To calculate the worst-case estimate of power budget (PB), you assume minimum transmitter power (PT) and minimum receiver sensitivity (PR):
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The table below shows two examples on calculations for power budget and minimum loss required:
The power budget for the Finisar SFP PN FTLF1721P2BCL is 25dB (-2dB - -27dB = 25dB) which means you can lose up to 25dB in the fiber/connections and it still operate within its specifications. On the other hand, the min loss required is 12dB (3dB - -9dB = 12dB) and this means the signal needs to be attenuated by 12dB to meet the transceiver spec.
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http://www.thefoa.org/tech/lossbudg.htm
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