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Polarization is one of the fundamental properties of optical waves. To cope with the exponential growth of the Internet traffic, optical communications has advanced by leaps and bounds within the last decade. For the first time, the polarization domain has been extensively explored for high-speed optical communications. In this paper, we discuss the general principle of polarization modulation in both Jones and Stokes spaces. We show that there is no linear optical device capable of transforming an arbitrary input polarization into one that is orthogonal to itself. This excludes the receiver self-polarization diversity architecture by splitting the signal into two branches, and then transferring one of the branches into orthogonal polarization. We next propose a novel Stokes vector (SV) detection architecture using four single-ended photodiodes (PD) that can recover a full set of SV. We then derive a closed-form expression for the information capacity of different SV detection architectures and compare the capacity of our proposed architectures with that of intensity-modulated directly-detected (IM/DD) method. We next study the 3-PD SV detection architecture where a subset of SV is detected, and devise a novel modulation algorithm that can achieve 2-dimensional modulation with the 3-PD detection. By using cost-effective SV receivers, polarization modulation and multiplexing offers a powerful solution for short-reach optical networks where the wavelength domain is quickly exhausted.


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