ADSL Interleaving is a point of much discussion in New Zealand.
Having Interleaving on makes a connection more reliable (and thus extends the range of reliable DSL), but has a penalty of higher latency.
Having Interleaving off makes a connection less reliable (and thus reduces the range of reliable DSL), but has the advantage of lower latency (very important for gamers).
There are a lot of myths going around as to what interleaving is and how it works. The best explaination PerryLorier was able to find is that Interleaving was basically reed solomon error correction, which is wrong.
A DSL frame is broken into two sections a "Fast" section and an "Interleave" section. In the fast section packets are sent with the FEC information sent directly after the packets. In the interleave section packets are all sent, then the FEC information is sent for each packet. This means that with interleaved packets you must wait for the entire frame to arrive before you can process any packets, but it moves the error correction information away from the data so data corruption is unlikely to take out both the FEC and the actual data. With Interleaving disabled, the FEC is sent directly after the packet, so a packet can be dispatched immediately after it's recieved (you don't have to wait for the entire frame to arrive), however the FEC is close to the payload data and if the data is corrupted then the FEC is probably corrupt as well and thus it's unable to correct the data.
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