Analytical study and computer-aided characterization are conducted for a novel subcarrier demultiplexing scheme, in which a pair of light modulators excited at one of the subcarrier frequencies precede the optical detectors. The baseband signal included in one of the subcarriers is directly detected from the photodiodes. Immunity from subcarrier interference is an important advantage of the scheme. A low-frequency scale model for this scheme has been experimentally investigated to characterize the performance of the proposed scheme. © 2003 Wiley Periodicals, Inc.