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We proposed and demonstrated a bidirectional wavelength-division-multiplexing passive optical network by using spectrum-sliced light-emitting diodes (LEDs) with cyclic arrayed-waveguide gratings (AWGs). When the spectrum-slicing technique is used, it is often difficult to secure an adequate amount of system margin due to the large slicing loss and low output power of LED. To overcome this problem, we reduced the slicing loss by using all the peaks of the spectrum-sliced light (separated by the free-spectral range of AWG) and improved the receiver sensitivity by using the forward-error correction technique. The excessive dispersion penalty (caused by using multiple peaks) was suppressed by using a simple dispersion precompensation circuit.