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Summary form only given. High capacity WDM transmission systems with large inter-amplifier spacing require large optical powers to maintain acceptable signal-to-noise ratios. In these systems, the transmission distances are limited mainly by cross-phase modulation (XPM) and self-phase modulation (SPM). In this paper we report new results explaining the source of the power penalties in pre- and post-compensated SSMF systems. A new technique utilising a gated, scanning interferometer allowed the direct measurement of spectral broadening using a recirculating loop. This is the first measurement of additional spectral broadening as a result of pulse compression in the precompensation configuration, and its contribution to the power penalty is discussed.