The transition from NRZ (Non-Return-to-Zero) to PAM4 (Pulse Amplitude Modulation with 4 levels) signaling enabled the industry to scale beyond 25 Gbps per lane without proportional increases in analog bandwidth. Understanding these modulation schemes is essential for engineers selecting transceivers at 100G, 400G, and 800G.
NRZ: Two-Level Signaling
NRZ encodes data as one of two voltage levels — high (1) or low (0). It is used in transceivers at 10 Gbps per lane and some 25G applications. The fundamental limitation is baud rate: doubling the bit rate requires doubling the analog bandwidth of all components.
PAM4: Four-Level Signaling
PAM4 encodes two bits per symbol using four distinct amplitude levels. At the same baud rate as 25 Gbps NRZ, PAM4 delivers 50 Gbps — doubling the bit rate without doubling analog bandwidth. This is why PAM4 is used in all 50 Gbps-per-lane applications: 400G QSFP-DD (8×50G), 800G OSFP (8×100G), and InfiniBand NDR.
Trade-offs
PAM4's four-level scheme reduces amplitude separation between adjacent levels by a factor of three, making it more noise-sensitive. This is addressed through:
- Forward error correction (RS-FEC, mandatory for PAM4 — adds ~100–300 ns latency)
- DSP-based equalization and CDR in the transceiver
- Improved laser and modulator linearity
Impact on Transceiver Selection
Verify that your switch ASIC and NIC firmware support the required FEC mode. Mismatched FEC settings are a common cause of link instability when mixing transceiver vendors. ATL Optics transceivers include full FEC configuration data in the EEPROM and are validated for correct FEC negotiation on supported platforms.