We explore design principles for next-generation optical nide-area net
works, employing wavelength-division multiplexing (WDM) and targeted t
o nationwide coverage. This optical network exploits wavelength multip
lexers and optical switches in routing nodes, so that an arbitrary vir
tual topology may be embedded on a given physical fiber network, The v
irtual topology, which is used as a packet-switched network and which
consists of a set of all-optical ''lightpaths,'' is set up to exploit
the relative strengths of both optics and electronics-viz. packets of
information are carried by the virtual topology ''as far as possible''
in the optical domain, but packet forwarding from lightpath to lightp
ath is performed via electronic switching, whenever required. We formu
late the virtual topology design problem as an optimization problem wi
th one of two possible objective functions: 1) for a given traffic mat
rix, minimize the network-wide average packet delay (corresponding to
a solution for present traffic demands), or 2) maximize the scale fact
or by which the traffic matrix can be scaled up (to provide the maximu
m capacity upgrade for future traffic demands), Since simpler versions
of this problem have been should to be NP-hard, we resort to heuristi
c approaches, Specifically, we employ an iterative approach which comb
ines ''simulated annealing'' (to search for a good virtual topology) a
nd ''flow deviation'' (to optimally route the traffic-and possibly bif
urcate its components-on the virtual topology). In this paper, we do n
ot consider the number of available wavelengths to be a constraint, i.
e., we ignore the routing of lightpaths and wavelength assignment for
these lightpaths. We illustrate our approaches by employing experiment
al traffic statistics collected from NSFNET.