The system model is shown in Figure 1. Each transmitted channel uses 33% duty cycle RZ pulses that are ideally phase modulated by a Mach-Zehnder modulator for RZ-DPSK. The channel bit rate is 40-Gb/s with assumed forward error coding (FEC) overhead of 6.7% yielding a total bit rate of 42.65-Gb/s. For back-to-back configuration, the multiplexed signal is sent directly to the receiver. A second order, super-Gaussian optical bandpass filter is used for WDM demultiplexing. All receivers are ideal with no shot and electrical thermal noise since the dominant noise in long-range systems is accumulated amplified spontaneous emission (ASE). A five-pole, Bessel postdetection electric filter is used with optimal bandwidth of 100 GHz. Three channels centered at 1550, 1551 and 1552 nm are simulated with results obtained from the center channel. Each channel is encoded by pseudo-random bit sequences of length 216-1 bits.