This paper describes 40-Gbit/s operation of 1.55-µm electro-absorption (EA) modulators applicable to compact and low-cost transmitters for very-short-reach (VSR) applications. We start by identifying factors that make a multi-quantum-well (MQW) design suitable for high levels of output power and for uncooled operation. From the basic experimental results, we determine that a valence-band discontinuity ΔEv at around 80 meV is optimal in terms of combining high-output-power operation and a good extinction ratio. We then apply the above findings in an InGaAsP-MQW EA modulator that is monolithically integrated with a distributed feedback (DFB) laser, and thus obtain operation with high output power (+1.2 dBm), a high ER (10.5 dB), and a low power penalty (0.4 dB after transmission over 2.6 km of single-mode-fiber). These results confirm the applicability of our EA modulator/DFB laser to VSR applications. After that, we theoretically demonstrate the superiority in terms of ER characteristics of the InGaAlAs-MQW over the conventional InGaAsP-MQW. InGaAlAs-MQW EA modulators are fabricated and demonstrate, for the first time, 40-Gbit/s operation over a wide temperature range (0 to 85).