An optical system and method includes a source-free optical network unit coupled to an optical fiber for receiving a centralized lightwave carrier signal with downstream data over the optical fiber. The optical network unit includes a coupler configured to split the original carrier signal into a first path and a second path. The first path includes an optical filter configured to reduce fading effects of the carrier signal. The second path includes a modulator configured to remodulate the centralized lightwave carrier signal with upstream data to produce an upstream data signal for upstream transmission.