By using thin membrane plating technology in collimating lens, we successfully manufacture a 160Gbit/s time-division multiplexer basing on the combination of fiber and space structure method. The multiplexer is flexible according to your practical need, which can output 20, 40, 80, or 160Gbit/s signal. For 20, 40, 80 or 160Gbit/s multiplexer, insertion losses are 4dB, 6dB, 8dB and 16dB respectively. The low insertion loss provides maximum transmission power. It also has such features: polarization insensitivity, very short coherence length, high time-delay accuracy, and excellent temperature stability. An experiment of two degrees PMD compensation in 160Gbit/s RZ optical communication system is achieved. The PMD monitoring technique is based on DOP as error signal. A practical adaptive optimization algorithm was introduced in dynamic adaptive PMD compensation. The experimental results show the improvement in PMD. With this compensator, a significant improvement of system performance can be achieved by auto-correlative curves. The 2.5ps first-order and 15ps2 second-order PMD are compensated. The PMD compensating time is less than 100ms.