I am referring to subcarrier intensity modulation. If you were to turn the optical power from 100% to 0% and then back to 100% in a sinusoid fashion, you would be modulating the intensity of the output. The diode observes the extremely high optical frequency as DC signal, onto which you are modulating another signal at a lower frequency. e.g. I(t) = cos(f_opticalt)cos(f_modulation*t), where I(t) is intensity vs time, f_optical is extremely high (THz) and f_modulation is the lower modulation frequency (MHz)