A typical transmitter does not have zero photo-current during bit-0. This happens due to two reasons.
1)
A small optical energy is transmitted during bit-0. This is due to the fact that the laser is not biased at the zero current but is rather biased at the threshold current to increase the switching speed of the laser. For bit-0 then, a small incoherent light is emitted by the laser.
2)
There is dark current in a photo-diode.
If are the photo-currents for the 0 and 1 bit respectively corresponding to optical powers , the extinction ratio for the data is defined as
The parameter Q (defined earlier) can be written as
where the average received power is and is the responsivity of the receiver.
Inverting the relation we get
We can note that for a given Q, the average power requirement increases with the extinction ratio. We can then define the power penalty as
Following Fig. shows the power penalty as a function of the extinction ratio.
The power penalty may become significant if the semiconductor laser is biased above the threshold. For lasers biased below threshold, the extinction ratio is typically 0.05 and the power penalty is less than 0.4 dB.
are the photo-currents for the 0 and 1 bit respectively corresponding to optical powers 
, the extinction ratio for the data is defined as 
and 
is the responsivity of the receiver. 
