The optic source used in optical communication is only providing the signal carrier, but to put the message onto the carrier, we need a modulator.
The process of varying one or more properties of a periodic waveform, called the carrier signal, with a modulating signal that typically contains information to be transmitted, is called modulation. The module we used to do modulation, is called as modulator.
Lasers and LEDs used in telecommunication applications are modulated using one of two methods: direct modulation or external modulation.
In direct modulation, the output power of the device varies directly with the input drive current. Both LEDs and lasers can be directly modulated using analog and digital signals. The benefit of direct modulation is that it is simple and cheap. The disadvantage is that it is slower than indirect modulation with limits of less than approximately 3 GHz.

In external modulation, an external device is used to modulate the intensity or phase of the light source. The light source remains on while the external modulator acts like a “shutter” controlled by the information being transmitted. External modulation is typically used in high-speed applications such as long-haul telecommunication or cable TV head ends. The benefits of external modulation are that it is much faster and can be used with higher-power laser sources. The disadvantage is that it is more expensive and requires complex circuitry to handle the high frequency RF modulation signal.

In morden digital telecommunication systems, the external modulation is mostly used as it's the only solution for mordern high speed systems.

