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The transmission performance of an optical frequency shift keying (FSK) heterodyne system, with a single bandpass filter and envelope detector for the receiver is investigated. A model is developed to describe the system operation in the case of a low intermediate frequency (IF) to bit-rate ratio, as may be preferable for practical system implementation. The analysis of the transmission performance is also applicable to amplitude shift keying (ASK) systems. As an example, results are presented for a 140-Mbit/s system, with an IF of 420 MHz, which show that such a system can suffer a penalty in optical receiver sensitivity of 2 dB compared with the ideal envelope detector receiver for large IF. When the effects of laser linewidth are also included, the system is observed to be less tolerant of the linewidth, and the optimum decision threshold is a function of the linewidth and other receiver parameters. The allowable laser linewidth for this system may be reduced by up to a factor of two when compared against that for the case of a large IF.