The major advantage of using the coherent detection techniques is that both the amplitude and the phase of the received optical signal can be detected, extracted and measured accordingly. This method helps in sending information by modulating either the amplitude, or the phase, or the frequency of an optical carrier. In the case of digital communication systems, the three possibilities give rise to three modulation formats known as amplitude-shift keying (ASK), phase-shift keying (PSK), and frequency-shift keying (FSK)
Use of coherent detection may allow a more efficient use of fiber bandwidth by increasing the spectral efficiency of WDM system. Sometimes it has been seen that the receiver sensitivity can be improved by up to 20 dB compared with that of IM/DD systems BER, and hence the receiver sensitivity.