Dispersion limits the information capacity at high transmission speeds. Dispersion reduces the effective bandwidth and at same time it increases the BER due to an increasing inter symbol interference. In order to remove the spreading of optical pulses, dispersion compensation is required. In single-mode fiber, performance is primarily limited by chromatic dispersion (also called group velocity dispersion) which occurs because the index of the glass varies slightly depending on the wavelength of the light, and light from real optical transmitters necessarily has nonzero spectral width. Polarization mode dispersion is another source of limitation which occurs because, although the single-mode fiber can sustain only one transverse mode, it can carry this mode with two different polarizations, and slight imperfections or distortions in a fiber can alter the propagation velocities for the two polarizations. This phenomenon is called birefringence.
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