The optimal frequency for interstellar communication, using "Earth 2017" technology, was derived in papers I and II of this series (Hippke 2017a,b). The framework included models for the loss of photons from diffraction (free space), interstellar extinction, and atmospheric transmission. A major limit of current technology is the focusing of wavelengths λ < 300 nm (UV). When this technological constraint is dropped, a physical bound is found at λ ≈ 1 nm (E ≈ keV) for distances out to kpc. While shorter wavelengths may produce tighter beams and thus higher data rates, the physical limit comes from surface roughness of focusing devices at the atomic level. This limit can be surpassed by beam-forming with electromagnetic fields, e.g. using a free electron laser, but such methods are not energetically competitive. Current lasers are not yet cost efficient at nm wavelengths, with a gap of two orders of magnitude, but future technological progress may converge on the physical optimum. We recommend expanding SETI efforts towards targeted (at us) monochromatic (or narrow band) X-ray emission at 0.5-2 keV energies.