There is an ever-increasing need for improved data storage techniques. A technology that can store terabytes of information in a small volume economically would be extremely useful, especially if the data could be (1) accessed randomly in several microseconds, and (2) stored permanently, making archiving possible. The goal of this Small Business Innovation Research (SBIR) Phase II project is to achieve these benefits by storing terabits of information volumetrically in an optical microchannel array, rather than on a surface. The individual bits are encoded both spectrally and spatially, and the array is accessed by scanning one end with a light beam. In Phase I the writing process and data coding schemes were analyzed theoretically, optics for reading and writing were designed, and an experiment demonstrated that the noise level was insignificant. The proposed Phase II research will demonstrate the volumetric reading and writing of data to fibers and microchannels with a spatial and spectral density that is consistent with achieving terabit storage in a compact array, Phase III will demonstrate terabit data storage and will develop a manufacturing prototype Microchannel Array ROM.<br/> The development of a data storage system that is based on optical microchannel storage has unique features that provide it with vast commercial potential, It combines high-capacity terabit storage With microsecond access time, volumetric storage density and low cost. Two major applications are: (1) the maintenance and use of large databases, particularly image databases, such as medical, scientific, and military databases; and (2) mass recording of large digital video information for the entertainment industry.