I'm not getting involved in the transport debate...

But If you think it's all just a matter of 1s and 0s then I suggest you get your mate to look at exactly how the receiving circuitry in a DAC decides whether the signal comming from the cable is a 1 or 0 (GrahamN as already given the answer).. then get him to research into the affect of Capacitance on a squarewave signal.. and he should (if he has any capacity to reason) realise how the cable can corrupt the signal in such a way as to induce errors (both bit and timing) in the input circuitry of the DAC. Once these errors have occurred.. they CAN NOT be rectified. The DAC has NO cirtuitry to enable it to do so.. it also has NO IDEA of what the signal SHOULD look like.

GTM