Transmitter and receiver IQ imbalance causes image interference that degrades performance in high capacity and high spectral efficiency optical orthogonal frequency division multiplexing (OFDM) schemes. Digital compensation is an attractive method to relax component specifications. In this paper we report the details of a hybrid compensation method for IQ imbalance compensation, comprising of orthogonal training symbol-based method for transmitter-side compensation and an iterative image reduction-based method for receiver-side imbalance compensation. We demonstrate performance improvement using the hybrid method in presence of frequency dependent imbalance by both simulation and back-to-back direct detection optical OFDM experiment. We report on the tolerable limit of transmitter IQ imbalance under presence of carrier frequency offset.
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