An optical signal transmitter of direct modulation, a method for transmitting optical signals, and an optical network are provided. The optical signal transmitter includes a laser diode operating at a bias current above a lasing threshold of the laser diode; a modulating device applies a modulation signal to the diode to produce a first output optical signal having first and second signal power levels; and a power level discriminator. The power level discriminator, from the received first output optical signal, generates a second output signal of significantly improved extinction ratio by reducing power of one of the first and second signal power levels of the first output optical signal. In one aspect, prior to receipt at the power level discriminator device, the second power level of the first output optical signal ranges from 10% to 60% of the first power level, and the second power level of the second output optical signal is reduced to less than 10% of the first power level of the second output optical signal.