  When photons are sent through a fiber as part of a quantum communication
protocol, the error that is most difficult to correct is photon loss. Here, we
propose and analyze a two-to-four qubit encoding scheme, which can recover the
loss of one qubit in the transmission. This device acts as a repeater when it
is placed in series to cover a distance larger than the attenuation length of
the fiber, and it acts as an optical quantum memory when it is inserted in a
fiber loop. We call this dual-purpose device a ``quantum transponder.''
