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A modulating retroreflector system includes a modulating retroreflector having a plurality of multiple quantum well modulator pixels and at least one transimpedance amplifier. The transimpedance amplifier receives a photocurrent generated by at least one of the plurality of modulator pixels. Each pixel is capacitively coupled to a current driver, which applies a high frequency digital electrical signal to the pixel when the voltage at the output of the transimpedance amplifier exceeds a threshold value. The modulated output of the retroreflector is reflected toward the source of the received optical beam. The system activates high frequency current drivers for only the illuminated pixels, eliminating the need for a separate angle of incidence sensor and reducing power requirements. A low frequency FSK signal can be superimposed on the DC optical interrogation beam and recovered as the unfiltered output of the transimpedance amplifier, to provide simultaneous bidirectional communication without a half-duplex communication protocol.