Bidirectional four-wave mixing (FWM) is investigated in a bulk semiconductor optical amplifier (SOA) for dispersion compensation and for the clear/drop functionality in optical time division multiplexed (OTDM) systems. Good performance for bidirectional midspan spectral inversion (MSSI) is theoretically predicted for bit rates of 10, 20, and 40 Gb/s and is shown to be in agreement with measurements performed at 10 and 20 Gb/s, Measurements of the clear/drop functionality using the bidirectional technique show excellent performance for a 4 x 10 Gb/s signal and is again in good agreement with simulations. The clear/drop functionality is also simulated for 4 x 20 Gb/s and 4 x 40 Gb/s signals.