This Phase I Small Business Innovation Research describes a means to develop a misalignment-tolerant fiber-optic laser transmitter. The insensitivity to misalignment within the transmitter optical subassembly (OSA) enables passive alignment to single-mode fibers for extremely low-cost, high-performance applications such as fiber-to-the-desk (FTTD) and network access modules. The OSA is based on vertical-cavity surface emitting lasers (VCSELs). Critical issues and a method for producing the passively-aligned OSA are presented in the proposal. The Phase I program will fabricate prototypes, evaluate the ease of assembly, test for tolerance to misalignment, test for opto-mechanical robustness, and examine further issues. The proposed OSA is equally applicable to VCSEL-based transmitters and high-performance photoreceivers. Results of all these activities will determine the feasibility of manufacturing passively-aligned transmitters by the proposed method. If the method appears feasible, Phase II program will be proposed to optimize the parameters for the various elements of the package and develop an efficient fabrication process. Ruggedness and reliability tests will also be performed in Phase II. The proposed transmitters/receivers would deliver laser performance at LED costs. VCSEL-appropriate, single mode, telecom transmitter and receiver modules combine for >$1B/year markets in the year 2003 with high growth rate. High-performance datacom could add several hundred million/year in addition. Short-wavelength VCSEL packages are useful for barcode scanners and pointers.