The future of telecom system design relies heavily on combining many optical devices into multifunctional modules with superior performance, lower cost, and smaller overall package size. The AWG module developments discussed here will afford comprehensive benefits to advanced optical networks. Current AWG development efforts focus on lowering insertion loss, reducing crosstalk, increasing channel bandwidth, decreasing channel spacing, managing dispersion, decreasing package size, and incorporating intelligent electronics. Better matching of the waveguide geometry and index of the integrated circuit to the optical fiber reduces the coupling loss. Other design optimizations to the waveguide bend radius and waveguide pitch at the slab can decrease circuit loss. High quality processing reduces the inhomogenieties that cause phase errors in AWGs and thus increase channel crosstalk. Optical design modifications in AWG waveguide tapers at the slab can change the passband shape and increase the channel bandwidth. Dispersion can be managed by better controlling the dispersion slope allowing for compensation. Innovations for temperature control circuitry and novel packaging designs and materials allow for smaller modules and reduced power consumption.