An optical amplitude modulator (16) has a first input (13) for receiving a continuous optical signal, a second input (17) for receiving a bipolar data encoded electrical signal, and a Mach-Zehnder interferometer transfer operation biased at Vnull for modulating the continuous signal based on the bipolar data encoded electrical signal for generating an AMI modulated optical signal having three electric field levels, null/nullE and 0, and two power levels, 0 and P, such that the resultant modulated signal is both amplitude and phase modulated.