We propose the coherent subcarrier multiplexed (SCM) system with distributing local oscillator (LO) in local loop. The proposed system can realize multichannel transmission with one optical carrier by using the SCM technique and has no need to have LO at each station. Therefore the proposed system becomes costeffective. The proposed SCM system uses bandpass filter to select a specific channel. We analyze CNR of the system with frequency-shift keying (FSK) in a multi-octave configuration. First, the general expression of CNR is derived and is shown for the following parameters such as the number of channels, the position of station on the loop, and the number of stations on the loop. Second, the optimal CNR, minimum required power of lasers, and maximum number of stations that the proposed system can serve are shown. Moreover CNR of the proposed system is compared with that of the system having LO at each station in local loop. It is shown that the proposed system can obtain good performance at the expense of slight increase of the output power of only two lasers at the central station. Therefore the proposed system is cost-effective and practical.