We present a technique for up and down-conversion of microwave (MW) subcarriers of digital signals based on the insertion of a passive all-optical device (unbalanced Mach-Zehnder interferometer) in a frequency modulated (FM) fiber-optic link. This technique has been successfully tested previously with CW signals. Here, simulations of digital transmission, spectral and BER measurements are presented. The technique uses a very low cost passive optical device that is also able to work with WDM and full duplex systems (1.3-1.5 /spl mu/m). The frequency range of operation is only limited by the direct modulation of the laser diode. BER measurements for BPSK format show low distortions caused by the system