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With the commissioning of the latest 10-Gb/s systems, vendors are now in the process of developing architectures for their next-generation products. 40-Gb/s components and subsystems are currently in development to address the necessities of these next-generation systems. The top three challenges associated with 40-Gb/s transmission are optical signal-to-noise ratio, dispersion, and high-speed components. In order to realize 40-Gb/s transmission, new component and subsystem developments are crucial. This paper reviews the latest transmission technologies and dispersion compensation techniques developed to fulfill 40-Gb/s transmission system requirements.