Ethernet-based Passive Optical Network (EPON) technology is being considered as a promising solution for next generation broadband access network as it offers a highly flexible, cost effective solution. In this paper, in order to support different services and bandwidths in the users' request, we propose a new approach to the problem of optimal bandwidth allocation in EPON. We show that by moving all the access control functionality to the Optical Line
Terminator, a flexible solution could be achieved which offers full support for Service Level Agreements and removes the burden of managing the configuration of every Optical Network Unit (ONU). We conduct detailed simulation experiments to study the performance and validate the effectiveness of the proposed Scheme.