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In this paper, a modified model of Gaussian pulse propagation in optical fiber is proposed to comprehensively analyze the performance degradation of spectral amplitude encoding (SAE) optical code division multiple access (OCDMA) systems due to group velocity dispersion (GVD). The analytical results show that the number of supportable users is decreased and the maximum transmission length (i.e. the length at which BER les 10-9 can be maintained) is shortened under the impact of GVD. For example, a system with 31times1 Gbit/s users and wavelength interval of 1.0 nm has a maximum transmission length of 16 km when transmitted power per bit is 0 dBm. Although, the impact of GVD is reduced when wavelength interval is decreased to 0.4 nm, it is still relatively strong. A power penalty of up to 8 dB is seen in the SAE/OCDMA system with the transmission length of 33 km. In addition, we propose a method to combat the impact of GVD, which can increase the maximum transmission length of SAE/OCDMA systems.