This project is funded under the National Science Foundation's (NSF) Small Business Innovation Research (SBIR) program, which is designed to provide an opportunity for small business, particularly the small high technology firm, to participate in NSF research. Phase I of the SBIR program serves as a filter to select promising proposals and determine if the firm can do high quality research. Phase II is the principal research project. Phase III is the conversion of the NSF-funded research into commercial applications and technological innovation supported by follow-on private venture capital or other non-federal financing. This Phase II project addresses the use of wavelength-division multiplexing (WDM) and optical amplification to handle multimedia communications with varying data rates in both analog and digital formats in a single optical network. In Phase I the researcher developed an optically-amplified subnetwork-partititoned WDM network concept with the following attributes: multiple wavelength-addressed virtual subnetworks, compatibility with other network standards including FDDI; incremental and flexibile upgradability; and high reliability. In Phase II the company is designing, building, and evaluating a small scale experimental 4-node WDM network integrating wavelength MUXs/DeMUXs, tunable transmitters/receivers, optical amplifiers, a star coupler and an FDDI adapter board. The network will serve as a testbed for subsequent Phase III commercialization.