An optical signal (116) is modulated with a transmitted electrical signal comprising an information-bearing component (122) and a pilot tone (120) having a predetermined frequency. Transmission of the signal results in distortion, including nonlinear optical transmission impairments. A method of receiving the signal includes detecting the optical signal to produce a received electrical signal (X) comprising a distorted variant of the transmitted electrical signal. The pilot tone is extracted from the received electrical signal using a filtering operation (308) having a predetermined characteristic, and a compensation signal determined based upon the extracted pilot tone. The compensation signal is applied to the received electrical signal (X) to produce a compensated signal (Y) having reduced distortion. The predetermined characteristic of the filtering operation (308) is represented by one or more parameters having values selected so as to substantially maximise a measure of quality of the compensated signal.