With increasing bit rates, accurate measurement of the parameters of digital data streams is more and more impaired by lossy interconnections. A good understanding of the principles of transmission line loss becomes therefore essential for the design of reliable test equipment for Gbit/s devices. This paper summarizes the physics of transmission line loss and presents the design of a device for loss compensation. Using a well-designed compensation filter eliminates rise and fall time degradations, additional jitter and other inaccuracies introduced by the lossy interconnection.