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Distributed processing of edge data centers in a metropolitan area is considered to reduce the large data traffic load due to Cloud Radio Access Network (C-RAN) fronthaul digitized radio-over-fiber protocols. A dynamic PHY split strategy is examined for high-capacity optical Dense Wavelength Division Multiplexing (DWDM) based C-RANs with limited edge data center resources. A network performance simulation model is developed based on a regional optical network in the New York metropolitan area to evaluate the dynamic midhaul approach. The use of a midhaul network improves the network performance by reducing traffic congestion and enhancing wavelength channel utilization. Simulation results show a 45% reduction in the required optical capacity in our proposed adaptive midhaul network compared to a traditional CPRI fronthaul network.