The Xelic 40G Optical Transport Network (OTN) Transponder provides the flexible transport of signals through a configurable highly integrated subsystem. A 40GE client signal is supported with line side ODU3/OTU3 and ODU3e2/OTU3e2 signals configurable through internal register control. The subsystem contains independent 40G OTN Framer, OTL3.4, 40GE, and 40G GFEC core processors with configurable options and a comprehensive programmable feature set. Independent interfaces are provided for framer GMP payload insertion/extraction control and external overhead port insertion/extraction. Optional loopbacks bypass modes, counters, and programmable consequential actions are available for debug and system integration purposes. A flexible 256-bit architecture is implemented with a data valid scheme and a high speed system clock operating at a rate up to 185MHz. The 40G Optical Transport Network (OTN) Transponder subsystem is targeted for both ASIC and FPGA applications.