Motivated by the looming "capacity crunch" in fiber-optic networks,
information transmission over such systems is revisited. Among numerous
distortions, inter-channel interference in multiuser wavelength-division
multiplexing (WDM) is identified as the seemingly intractable factor limiting
the achievable rate at high launch power. However, this distortion and similar
ones arising from nonlinearity are primarily due to the use of methods suited
for linear systems, namely WDM and linear pulse-train transmission, for the
nonlinear optical channel. Exploiting the integrability of the nonlinear
Schr\"odinger (NLS) equation, a nonlinear frequency-division multiplexing
(NFDM) scheme is presented, which directly modulates non-interacting signal
degrees-of-freedom under NLS propagation. The main distinction between this and
previous methods is that NFDM is able to cope with the nonlinearity, and thus,
as the the signal power or transmission distance is increased, the new method
does not suffer from the deterministic cross-talk between signal components
which has degraded the performance of previous approaches. In this paper,
emphasis is placed on modulation of the discrete component of the nonlinear
Fourier transform of the signal and some simple examples of achievable spectral
efficiencies are provided.Comment: Updated version of IEEE Transactions on Information Theory, vol. 60,
no. 7, pp. 4346--4369, July, 201
