We propose an all-optical regeneration scheme for 16-QAM signal. An incoming signal is 50/50 split into I and Q arms. Each arm contains three phase sensitive amplifiers (PSAs); between the PSAs the signal propagates through highly nonlinear fiber (HNLF) and acquires nonlinear phase shift due to self-phase modulation (SPM). At the end, another 50/50 coupler combines the regenerated I and Q signals.

In each arm, the first PSA is used to amplify one quadrature of incoming signal and deamplify the other quadrature in order to squeeze the phase noise. Since data encoded on the deamplified quadrature is also erased by the first PSA, signal in each arm retains only the data on amplified quadrature. After the first PSA, only amplitude noises remain on the two power levels of each signal.

The amplitude noise is regenerated by the SPM in the HNLF, followed by the PSA. The SPM converts the amplitude noise to the phase noise and thus causes rotation of the uncertainty (noise) ellipse around the signal phasor in the complex plane. For a proper nonlinear phase shift, the long axis of the noise ellipse can be significantly compressed by the PSA. To suppress the noise on both signal levels with 1:9 power ratio, there are two HNLF+PSA combinations in each arm.

Our modeling shows better than 4 dB noise reduction for all constellation points. Moreover, the higher signal levels experience even greater noise suppression, which is beneficial for their nonlinear propagation through the transmission fiber.