We propose and demonstrate that the power budget and scalability of the wavelength-division-multiplexed passive optical network (WDM PON) implemented by using reflective semiconductor optical amplifiers (RSOAs) can be significantly improved by modulating the downstream signals in Manchester format instead of the conventional non-return-to-zero format. As an example, we experimentally show that the maximum transmission distance of the RSOA-based WDM PON can be increased by a factor of 2 by using the Manchester-encoded downstream signals. (C) 2007 Optical Society of America.