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Time and wavelength division multiplexed passive optical network (TWDM-PON) trend is considered as the most extraordinary trend of the next generation solution to accommodate exponential traffic growth for converged new services. In this paper, we briefly review recent progress on TWDM-PON system through the use of low cost directly modulated lasers (DMLs) transmission for various line rate transmissions to date. Furthermore, through simulation, we propose and evaluate a cost effective way to upgrade TWDM-PON up to a symmetric capacity of 128 Gb/s using fiber Bragg gratings (FBGs) in optical line terminal (OLT) as a paramount dispersion manager in high speed light-wave systems in both upstream and downstream directions. A low cost and potential chirpless directed modulated grating laser (DMGL) is employed for downstream link and DML with a single delay-interferometer (DI) is employed for …