In this study the principles of a frequency shift keying optical MODEM design have been investigated. In this MODEM modulated digital data has been transmitted between transmitter and receiver via light in the free space. An infrared LED light has been modulated by FSK modulated signal at the transmitter and this modulated light has been converted to an electrical signal using a photo detector at the receiver end. The communication distance depends on both LED's radiant power and photo detector sensitivity. In many available applications the photo detector sensitivity and receiver gain have been increased to increase communication distance. In this study LED's radiant power has been increased rather than photo detector sensitivity. Beside of increasing communication distance the background noise effect has been decreased by driving LEDs with pulsed high currents.