A Mach-Zehnder (M-Z) interferometer for modulating a continuous wave (CW) optical carrier with a duobinary encoded driving signal, said M-Z interferometer having a first and a second travelling wave-guide, a splitter between an input port and said first and second travelling wave-guides, a combiner between said first and second travelling wave-guides and an output port, a first and a second travelling wave electrode, each associated with said respective first and second travelling wave-guide, and a control electrode, said M-Z interferometer further comprising:
- means for applying a bias voltage V.sub.Bias between said first and said second travelling wave electrode;
- means for providing said duobinary encoded driving signal to said control electrode;
- means for coupling said CW optical carrier signal to said input port;
- and
- means for coupling a duobinary modulated optical signal from said output port into an optical fiber.