We propose and demonstrate a reflection-type optical modulator, with surface-normal architecture, that exploits the optical saturation of absorption in semiconductor quantum wells. The modulation section of the modulator, which is composed of quantum wells placed within a Fabry-Perot cavity, is optically controlled by an intensity-modulated beam generated by an in-plane laser integrated monolithically on the same wafer and grown in a single epitaxial step. The modulation section and the in-plane laser share the same medium; therefore, efficient coupling between the control beam and the signal beam is achieved. The device was successfully used for active mode locking of an erbium-doped fiber laser.