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Multimode effects in the free propagation region (FPR) of an etched diffraction grating (EDG) demultiplexer based on silicon-on-insulator are analyzed. The insertion loss and the crosstalk increase due to these undesired multimode effects. A bi-level taper structure between the FPR and the input/output waveguides is proposed. It is shown that such a taper structure can reduce the multimode effects to an almost negligible level. At the same time, the 3-dB passband width is enlarged by increasing the rib width. No additional fabrication process is needed for an EDG with such a design.