Free space optical wireless communication is an attractive way of connecting vast numbers of urban area customers to the fiber optic communication network. We have designed and tested a prototype 2 km long 1.2 Gb/s optical wireless link operating at 1550 nm. An EDFA amplified signal from a standard fiber optic transmitter unit was sent via a small telescope to a 5 inch corner cube mounted on the roof of a building located over 1 km from the transmitter. An estimated 10 mWatt incident on the corner cube was reflected back to the transmitter/receiver unit, where the signal was successfully recovered. Using this test range we have tested the two-fold time-delayed diversity scheme. Diversity delays of 5 ms, and 10 ms show significant reductions in the probability of a joint fade at a particular level. Delays beyond about 10 ms do not significantly improve link performance. The system we have developed allows straightforward DWDM and polarization diversity extensions. Design issues for such optical wireless systems are discussed. We believe that such optical wireless transmitter/receiver units, which operate as an extension of the fiber network, offer a reliable and inexpensive solution for the 'last mile' problem in optical communications.