In this paper a novel method to increase the modulation bandwidth of vertical-cavity surface-emitting lasers (VCSEL) is proposed. The modeling predicts that the modulation bandwidth can be enhanced by 60% with lateral optical feedback. Even if the relaxation oscillation frequency is below 15GHz without optical feedback, the modulation bandwidth can reach at 40GHz beyond the limit of a relaxation oscillation frequency. Small and large-signal-modulation analysis is carried out. The result shows a potential of high-speed modulation beyond 40Gbps for use in low-power consumption optical interconnects.