This paper describes the fabrication and characteristics of a new multiple-quantum-well (MQW) integrated distributed feedback (DFB) laser diode-electroabsorption (EA) optical modulator for use as the transmitter light source in multigigabit, long-distance optical fiber communications. The device employed a novel integration scheme for active/passive waveguide coupling achieved by controlling the quantum energy of selectively grown MQW structures. This new fabrication technique for photonic integrated circuits (PICs) facilitates smooth, high-quality waveguide coupling between the interconnected guided-wave elements. It is based on the growth rate enhancement or compositional changes in the material of the quantum-well layer grown by selective-area metalorganic vapor phase epitaxy (MOVPE). Good local quantum energy control within a very wide range is shown for simultaneously grown MQW crystals. Moreover, the crystal quality, well/barrier heterointerface, and flatness and uniformity of these selectively grown MQW crystals are found to be as good as those of normally grown crystals. This technique is applied to an MQW integrated DFB laser diode-EA modulator. Superior device performance, including a low threshold and highly efficient lasing properties, as well as high-speed, low-drive-voltage, and low-chirp modulator characteristics are attained due to improved optical coupling, easy fabrication, and sufficient crystal quality of selectively grown MQW structures. 10 Gbit/s data transmission is demonstrated over a 500 km dispersion-shifted single-mode fiber. This combined with long-term device reliability, makes this integration technique more attractive for practical fabrication of semiconductor PICs.