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What is this Category (Cat5 Cat6) wire stuff about?

The 568 Standard of the American National Standards & the Institute/Electronic Industries Association (ANSI/EIA) and 11801 standard of ISO/IEC specify Seven "Categories" of twisted pair systems of cabling commonly known as Cat 1 , Cat 2, Cat 3 and so on.

Cat 1: It includes the unshielded and untwisted wiring, which is commonly known as “inside wire” in the Telecom Industry. Cat 1 supports 1 Mbps data rate and is commonly used in Doorbell wiring, Basic rate of Interface in ISDN and in analog voice (POTS). 

Cat 2: It includes the unshielded twisted pair (UTP) derived from IBM Type 3 specifications. Cat2 supports up to 4 Mbps data rate and is mainly used in Token Ring.

Cat 3: Category 3 has unshielded twisted pair wiring with the maximum bit rate of 16 Mbps and 100 ohm impedance. Common uses are with voice (analog), 10Base-T, 100Base-T2 100Base-T4 Ethernet.

Cat 4: The unshielded twisted pair wiring fall in category 4. Supports maximum of 20 MHz of transmission with 100 ohm impedance. Cat4 is never widely used and is not considered to be a standard. However common uses could be with 10Base-T, 100Base-T2 and 100Base-T4 Ethernet. 

Cat 5: Unshielded twisted pair wiring with 100 ohm impedance and up to100 MHz data rate. Cat5 is no longer supported and is replaced by its next version Cat 5e. Cat 5 May be used with 10Base-T, 100Base-T2, 100Base-T4 and 100Base-TX Ethernet. 

Cat 5e: Cat 5e cable is the extension of Cat 5 with the same data rate 100 MHz. Most of the specifications of Cat 5 are improved in Cat 5e like PSELFEXT (Power Sum Equal Level Far End Cross Talk), Attenuation and NEXT (Near-End Cross Talk). Cat 5e may be used for 10Base-T, 100Base-T2, 100Base-T4, 1000Base-T and 100BaseTX Ethernet.

Cat 6: Cat 6 cable has a bandwidth of 250 MHz and is backward compatible with the lower categories. It supports the same Ethernet standards as Cat 5e and quickly replacing Cat 5e.

Cat 6a: This standard was published in Feb. 2008 and is the minimum for Data centers in the ISO data standard. Support up to 500 MHz of data rate and 10GBASE-T, either shielded (ScTP, S/FTP, STP) or (UTP) unshielded.

Cat 7: Supports transmission at frequencies up to 600 MHz over 100 ohm impedance. Cat 7 has a wide area of implementation like Full motion videos, Government and manufacturing specs and fully shielded (S/FTP) system.

This categorization is based on the data rates supported by cabling systems. The specifications include the type of cable material, the kinds of connectors and the junction blocks used in compliance with the particular category. Category specifies the cable and the class specifies the connector in the ISO/IEC standards. In the EIA 568 standards, the maximum distance for UTP copper cabling is 100 meters (90 meters of cable plus 10 meters of patch cord).

The two most generally used categories are Cat 6 and Cat 5e. If Cat 3 is pushed to faster speeds it can make transmission errors. Cat 5e is the least wiring grade for structured wiring. All the components must meet or exceed to that particular category to fulfill the specific requirements of that category for installation. If Cat 3 patch cord is used on Cat 6, the performance reduces to Cat3.