Pulse position modulation (PPM) schemes have been proposed as a method of utilising the bandwidth available in optical fibres, with a 5–11 dB improvement in sensitivity being achieved compared to an equivalent pulse code modulation (PCM) system. However, this improvement comes at a cost. If digital PPM is used, the final data rate can be almost 23 times that of the original PCM, and this makes implementation difficult. The author describes a novel coding technique that combines dicode, a tertiary code sometimes used in magnetic recording, and digital PPM to form dicode PPM. It is shown that dicode PPM gives a receiver sensitivity greater than digital PPM while operating at only four times the original data rate. Original results presented predict that a high fibre bandwidth dicode PPM system can give sensitivities of –50.44 dBm and –44.27 dBm when operating with 155.52 Mbit/s and 1 Gbit/s PCM data, respectively. This should be compared to typical PCM sensitivities of –38 dBm and –28 dBm. It is also shown that dicode PPM outperforms digital PPM at low fibre bandwidths by 3.02 dB