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The primary objective of time wavelength-division multiplexing passive optical networks (TWDM-PONs) development at the moment is the cost-effective capacity acquisition. This work addresses this issue by demonstrating a full-system TWDM-PON was selected as a primary choice to NG-PON2 by Full-service access network (FASN) unanimously agreed and International Telecommunication Union-Telecommunication Standardization Sector (ITU-T) G.989. An asymmetric TWDM NG-PON2 was demonstrated that provides 160 Gbps downstream and 80 Gbps upstream which is the target capacity by ITU-T G.989.1 based on OptiSystem-7 software. We propose to use fiber Bragg grating (FBG) and Er-doped fiber amplifier (EDFA) to reduced both of the chromatic dispersion effect and system attenuation until given permission to enhance the distance communication system. The proposed system’s performance is evaluated and compared with other works and ITU-T G.989.2 recommendations to demonstrate how the system can be enhanced in terms of capacity, link distance, bit error rate (BER), Q-factor and receiver sensitivity. According to the results, the optimum possible distance under communication requirements (6 for the Q-factor and 10−9 for the BER) is around 65 km for the system with dispersion compensation. With the help of the low-cost directly modulated laser (DML) for uplink, we successfully improve the power budget to 41.2 dB along 65 km of bidirectional fiber at a 1:512 splitting ratio.

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