PHOTON, a project within the ACTS programme of the European Community, aims at substantiating the concept of a pan-European all-optical transport overlay network by the development of key elements and the implementation of then- key functionalities in a field trial. The theoretical work deals with further refinement of network concepts - like network architecture and network evolution - by studying link and network behaviour using appropriate modelling and simulation tools. The PHOTON field trial will implement a border crossing star network with transmission and cross-connection of optical frequency division multiplexed (OFDM) signals by connecting Munich with Vienna via Passau over already installed monomode fibre, spanning a distance of 524 km. Eight channels in the 1.55 µm window, separated by 400 GHz, for 10 Gbit/s and 2.5 Gbit/s SDH transmission and a leased optical channel service are available without demanding for full optical regeneration. Some key components like suitable OFDM filters, lasers with specific output frequencies, and a Krypton frequency reference are developed within the project. In a parallel project, called MOON, the PHOTON field trial will be used as a basis for the development of management concepts.