A downhole system provides a data interface to a first downhole tool such as a steerable rotary tool. The data interface uses a close proximity data connections such as a connection between inductive loops or coils or a direct wired or optical connection. The interface provides data to a second downhole tool in a drill string section adjacent to the first downhole tool. In some embodiments data is passed to a third downhole tool that includes a telemetry transmitter. The third downhole tool may comprise a MWD (measurement while drilling) tool.