Motivated by the communication problems caused by phase noise in those semiconductor lasers that may be used for fiber-optic data transmission, we consider heterodyned binary Differential Phase-Shift Keying (DPSK) in conjunction with high-rate (short time chip) redundancy as provided by repetition or by more complex coding techniques. In surprising contrast to repetitive coherent phase-shift keying where only a loss of a 2/π (2 db) in power is incurred in the limit of infinitely many infinitesimal time chips, we show that DPSK requires, in this limit, an infinite number of photons per bit. This is true regardless of the coding scheme used with the DPSK modulation. Next we find the bandwidth expansion that minimizes the number of received photons per bit required to hold the error rate at 10 <sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">−9</sup> for two situations: first for a simple repetition code, and then for a repeated (24, 12) Golay code with maximum likelihood detection. The performance of the latter is assumed to be representative of other optimally detected codes of the same rate, such as convolutional codes with Viterbi decoding. Explicit curves relating required photons per bit to the bandwidth expansion are given for B/R ratios of 0.01 to 10, where B is the laser linewidth and R is the data rate. An example of the results is that for B/R = 0.1 and a bandwidth expansion of 10, about 23 photons per bit are required for the repeated Golay code to perform as well as uncoded DPSK without phase noise (which requires 20 photons per bit for Pe = 10 <sup xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">−9</sup> ). If B/R = 0.01 the bandwidth expansion is reduced to 2, and 12 photons per bit are required, thus outperforming the phase-stable, but uncoded, situation.