Polarization division multiplex (PolDM) doubles the data rate in existing t
runk lines without need for additional optical bandwidth. In the presence o
f dispersion compensation, polarization mode dispersion (PMD) limits the ac
hievable transmission length. PMD tolerance of standard binary intensity mo
dulation or non-return-to-zero coding has already been published. Recently,
the return-to-zero (RZ) transmission format has become of more interest; t
herefore we assess the PMD tolerance of PolDM by numerical simulations and
a transmission experiment. For a given total data rate per wavelength PolDM
supports at least as much differential group delay as standard binary inte
nsity modulation. So, PolDM is an attractive multilevel modulation scheme t
o solve capacity problems with low additional effort. (C) 2001 Optical Soci
ety of America.