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This paper analyzes the effect of third order dispersion on the pulse compression produced by a highly nonlinear fiber. The optical pulse train has been designed by a novel circuit using the principle of superposition of lightwaves. It is seen from the calculations that the pulsewidth of 7.5 psec can be compressed down to 4.4 psec level by the highly nonlinear fiber (HNLF) of length 10 Km. The third order dispersion of the fiber reduces the pulsewidth in the pulse compression process of the highly nonlinear fiber.