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Effective power consumption at central office (CO) in passive optical network can be reduced by sharing the central office resources to the maximum number of underutilized users. The choice of modulation format is very important to improve the power budget and to allow larger power splitting. Nonlinear effects for duobinary and NRZ modulation format are analyzed and behavior of reflected power from bidirectional fiber is compared for different launched powers. For a fixed BER, duobinary modulation format decreases the required receiver power as compared to NRZ thus improve the power budget. This power budget improvement is used to increase the splitting ratio to enable single optical line terminal (OLT) to serve more number of low load or underutilized optical networking units (ONUs) to reduce the CO resource requirement in order to give energy and cost efficient access network.