We investigate the use of a 1060 nm single-mode vertical-cavity surface-emitting laser (VCSEL) and a 1060 nm single-mode fiber as a competitive single-mode technology for cost and power efficient long-reach optical interconnects. Errorfree transmission (BER < 10-12) over 2 km is demonstrated at bitrates up to 40 Gbps under OOK-NRZ modulation, without equalization, forward-error correction, or other forms of digital signal processing. The VCSEL is extensively characterized with respect to its static and dynamic performance, including the power-voltage-current characteristics, spectral characteristics, beam divergence, modulation response, relative intensity noise, and frequency chirp. The measured dependence of power penalty on fiber length is consistent with an analysis of chirp-induced pulse compression and broadening along the negative chromatic dispersion fiber.