Black Box Explains...Optical isolation and ground loops..
Optical isolation protects your equipment from dangerous ground loops. A ground loop is a current across a conductor, created by a difference in potential between two grounded points, as in equipment in two buildings connected by a run of RS-232 or other data line. When two devices are connected and their potentials are different, voltage flows from high to low by traveling through the data cable. If the voltage potential is large enough, your equipment wont be able to handle the excess voltage and one of your ports will be damaged.
Ground loops can also exist in industrial environments. They can be created when power is supplied to your equipment from different transformers or when someone simply turns equipment on and off. Ground loops can also occur when there is a nearby lightning strike. During an electrical storm, the ground at one location can be charged differently than the other location, causing a heavy current flow through the serial communication lines that damage components.
You cant test for ground loops. You dont know you have one until a vital component fails. Only prevention works. For data communication involving copper cable, optical isolation is key.
With optical isolation, electrical data is converted to an optical beam, then back to an electrical pulse. Because there is no electrical connection between the DTE and DCE sides, an optical isolator unlike a surge suppressorwill not pass large sustained power surges through to your equipment. Since data only passes through the optical isolator, your equipment is protected against ground loops and other power surges.