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A novel low-cost and energy-efficient approach for reaching 40 Gb/s signals is proposed for cost-sensitive optical access networks. Our proposed design is constituted of an innovative low-complex high-performance digital signal processing (DSP) architecture for pulse amplitude modulation (PAM-4), reuses existing commercial cost-effective 10-G components and eliminates the need of a power-hungry radio frequency (RF) component in the transmitter. Using a multi-functional 17-tap reconfigurable adaptive Volterra-based nonlinear equalizer with noise suppression, significant improvement in receiver optical power sensitivity is achieved. Results show that over 30 km of single-mode fiber (SMF) a link power budget of 33 dB is feasible at a bit-error-rate (BER) threshold of 10⁻³.