The ultimate capacity and length of fiber-optic systems using optical amplifiers is primarily limited by noise and dispersion. Due to their nearly ideal electrooptic characteristics, externally modulated 1.5-mum lasers are expected to be the technology of choice in these long unrepeatered systems. However, here too there are limitations. In this paper we review key laser and modulator characteristics that impact the use of externally modulated lasers in the presence of chromatic dispersion excluding effects due to fiber nonlinearities. After a brief review of transmission performance with directly modulated 1.5-pm DFB lasers which have limited application of up to 80 km at 2.5 Gb/s, we discuss the key design characteristics of externally modulated transmitters. We then present experimental results showing the effects of modulator chirp and laser linewidth at a 2.5-Gb/s transmission rate. We find that lasers with CW linewidth under 100 MHz will have less than 2-dB dispersion penalty for 600 km of non-dispersion-shifted fiber. Furthermore, lower dispersion penalties can be realized if the modulator chirp is tuned so as to narrow the transmitted pulses. In addition, excellent modulator stability is demonstrated for 60 days of error- and degradation-free 2.5-Gb/s operation.