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Progress in high-capacity optical communication systems in 2010 is reviewed, with spectral efficiency (SE) as the main figure of merit. Advanced modulation formats, such as quadrature amplitude modulation (QAM) and orthogonal frequency-division multiplexing (OFDM), together with polarization-division multiplexing (PDM) and digital coherent detection, are playing key roles in approaching the Shannon limit of SE for optical fiber communication. Photonics is now entering into a new era of high SE on par with electronics (wireless), yet with orders of magnitude higher overall system capacity.