An optical transceiver and a method to setup the optical transceiver are disclosed, where the transceiver has a function to compensate the distortion and the dispersion due to the limited bandwidth of the electrical signal line, that of the active devices, and that of the optical fiber. The optical transceiver comprises a transmitter with an equalizer unit and a receiver also with an equalizer unit. The equalizer unit in the transmitter compensates the distortion due to the limited bandwidth of the transmission lines for the electrical signal and that of the semiconductor active device, while, the equalizer unit in the receiver compensates the dispersion due to the limited bandwidth of the optical fiber.