We investigate the effects of inactive regions [dead zones (DZ's)] in multiple-quantum-well binary-phase modulators used for free-space dynamic optical interconnection applications. Results, however, have implications for other types of pixelated spatial light modulators (SLM's). To our knowledge, the effects of DZ's in SLM's have not before been thoroughly studied in a context other than optical correlation. We investigate the DZ's (considered to be either opaque or transmissive) as a feature that may be exploited in system design, calculating light efficiency and fidelity as a function of DZ fractional width. It is shown that in particular cases an appropriate choice of DZ width would lead to an optical interconnection with substantially improved cross-talk performance. © 1998 Optical Society of America.