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In this paper we have studied and analyzed the spectrally encoding/ decoding OCDMA system for different lengths of fiber in terms of quality factor (Q) and bit error rate (BER) performance. The performance characteristics like bit error rate, eye diagrams and eye closure penalty at the output are studied by simulating for different lengths of fiber. An upper bound on the bit error probability for phase encoded OCDMA system is maintained under the above considerations. The effect of both dark current and thermal noises is neglected. The advantages of this system over the conventional time-encoded system include the availability of larger number of low cross correlation sequences and the implementation of efficient decoders for low error probability detection. It has been observed that there are two major problems giving rise to performance degradation of the system in terms of no of users and type of code. In optical …