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There is growing demand for higher bit rates in the access domain, due to the emergence of bandwidth-hungry applications, such as Video-on-Demand and file sharing. Incoherent QAM modulation used in a hybrid WDM/TDM passive optical network (PON) is proposed as a way to achieve the necessary high bit rates. The use of multilevel modulation allows for the use of low-speed electronic and optical components and is scalable to very high bit rates (e.g. 100 Gb/s) for future applications. Along with the resource sharing and the scalability of the network architecture, this leads to a cost-efficient and future-proof solution for delivering broadband applications to end users. In particular, bidirectional transmission of a 10 Gb/s incoherent 16QAM signal has been modelled in VPI. The performance of the system in terms of BER as a function of the received power has been evaluated. Also, the impact of the input power of the upstream signal is examined. The results indicate that incoherent 16QAM is an attractive option for future optical access networks.