An optical network includes an optical ring having a plurality of subnets. The subnets each include one or more add/drop nodes that are coupled to the optical ring and that passively add and drop traffic to and from the optical ring in one or more wavelengths. The optical network also includes a plurality of gateway nodes that are each coupled to the optical ring at a boundary between neighboring subnets. Each gateway node forwards a first copy of a received optical signal to a multiplexer/demultiplexer unit of the gateway node, which selectively forwards or terminates the traffic in each wavelength of the first copy. The gateway nodes also forward a second copy of the received optical signal to a regeneration element. The gateway nodes selectively forward or terminate the traffic in each wavelength of the first copy at the multiplexer/demultiplexer unit. Moreover the gateway nodes selectively perform one of the following on the traffic in each wavelength of the second copy at the regeneration element: terminate the traffic, forward the traffic after regenerating the traffic, or forward the traffic after regenerating and converting the wavelength of the traffic.