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We describe progress to date on the IST project PIEMAN (Photonic Integrated Extended Metro and Access Network, www. ist-pieman. org), which aims to build a radically new photonic (all-optical) communication system integrating metro and access networks, thereby greatly simplifying the network architecture and significantly reducing the cost to deliver future broadband services to all residential and SME customers. The optical fibre system being developed will also allow individual customers to directly access bandwidths of up to 10 Gbit/s upstream and downstream. Some of the key physical layer design issues are outlined and the solutions studied within the project are also described.