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Modeling and design, simulation, characterization and performance evaluation of high data rate and high capacity long-haul DWMD light wave systems are presented. As well, a methodology for finding the optimum modulation format that can effectively enhance the system performance without major changes in the existing infrastructure are presented. An exemplary 42.7 Gb/s, 80 Km × 16 spans DWDM light wave system including transmitter, different fiber types (SSMF, LEAF, and TW-RS), amplifiers, and receiver is designed. Suitable model implementations for device and systems simulations in the time domain using OPTSIM CAD simulator are presented. The performance of the exemplary system is examined using four different modulation formats: NRZ-OOK, optical duo binary, differential binary phase shift keying (NRZ-DBPSK), and differential quadrature phase shift keying (RZ-DQPSK). Simulation results show that the overall system's performance using a combination RZ-DQPSK with the LEAF based on reduced channel spacing (50 GHz with spectral efficiency of 0.8 bit/s/Hz) provides a remarkable improvement (approximately 50% in the transmission distance ) over implementations based on other fiber and modulation format combinations. Model verification and validation performed by comparison of simulated results to measured results demonstrated the utility of the proposed design methodology.