The present invention provides an improved optical frequency demodulation technique for extracting overhead information from an optical channel signal carrying both high bit rate payload and low rate overhead data. The invention makes use of asymmetrical Mach-Zehnder interferometry (AMZI) in an optical frequency demodulator to efficiently extract the overhead information from the optical channel signal by frequency discrimination without necessitating a complete demodulation of the optical channel signal. By comparison to existing demodulation schemes, the invention provides an all-optical low cost, high gain technique for recovering the overhead data which improves the payload signal-to-noise ratio and enhance performance.