The SNR calculation and or the BER calculation assumes that the optical signal consists of ideal bit streams. That is, it assumes that the bit-1 consists of optical pulse of constant energy, and there is no energy in bit-0.
In practice however, the bits are distorted due to various reasons and the optical signal is degraded in addition to the system noise.
To compensate for the system degradation, the signal power has to be increased to achieve the same SNR or BER performance as that of an ideal system. This increase in power is called the Power Penalty.
There are two types of signal degradation which can contribute to the power penalty.
1)
Degradation during propagation in the optical fiber
2)
Degradation due to peripheral electronic and optic components in the system like the lasers, photo-detectors, couplers etc.
