An optical telephone and communication system with interferometers at the transmitter and receiver can use optical time-delay difference and differential frequency shift modulation and multiplexing techniques. The power to the system is provided from either a remote optical source through the optical network or a local optical source. The optical network provides one or two optical connections to the sets. Part of the optical signal from the network is converted to electrical energy stored in a rechargeable battery. The optical sources used have a known coherence function, wavelength and coherence length Lc. The transmitter converts the information to phase variation in one arm of the transmitter interferometer and the receiver recovers this signal by using a matched interferometer. The path imbalance between the two arms of either interferometer is greater than Lc. Each set is assigned a particular time delay difference and/or differential frequency shift for addressing.