In future optical networks based on frequency division multiple access (FDMA), e.g., TV distribution, optical amplifiers will be required to assure adequate reception. A key figure of merit is η, the efficiency with which channels can be packed into a given bandwidth relative to the ideal packing of 100 percent corresponding to abutting channels (channel spacing = channel bandwidth). Packing can be severely limited by intermodulation distortion due to inherent amplifier nonlinearity. Assuming constant envelope signaling we use a recently developed amplifier model, to show that, by employing practical coding methods, η can be greatly increased. A simple, general, algebraic formula for η is derived in terms of amplifier, receiver, and code parameters. For illustrative purposes we consider the packing of 50 Mbits/S channels into a 1 THz optical bandwidth, assuming typical amplifier and receiver parameters. We find that straight FDMA gives η = 5 percent (1000 channels); direct sequence spread spectrum with a processing gain of 9 dB gives η = 12 percent (2500 channels); a simple, rate 1/2, constraint length 7, convolutional code with soft decisions gives ij = 46 percent (9,100 channels), which drops to η =20 percent (4000 channels) with hard decisions; while a rate 3/4, Reed-Solomon code (hard decisions) gives η = 42 percent (8300 channels). © 1990 IEEE