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The duobinary signalling concept is applied to direct frequency modulation of a semiconductor laser. The main goal is the achievement of a low-cost high bit-rate transmission with reduced modulation bandwidth requirement of the laser diode. The simulation and experimental work demonstrate a laser modulation bandwidth reduction of about 50%. The system exhibits a high tolerance against fibre nonlinear effects, up to 20 dBm, and phase noise, up to 170 MHz of linewidth at 10 Gbit/s.