Abstract: The beginning of the second decade of the 21st century has been characterized by a paradigm shift in the overall meaning of the term “information society.” First, “on-demand” communication and information exchanged at a variety of speeds, connection qualities, and underlying content has become vital. Since the Internet has become synonymous with the information era, significant efforts have been invested in making it flexible, universally accessible and affordable. Secondly, by 2015, IP traffic in the United States alone will reach an annual total of 1,000 exabytes, which is 50 times larger than the corresponding 2008 value. In response to this trend, rapid transition to a unified, high-speed packet-based core/edge network architecture, which extends all the way from data centers to both residential and business end-users, is being undertaken by major telecom carriers all around the globe. The current network must thus evolve into a dual-layer terabit Ethernet architecture that enables flexible data packet transport over fixed, high-speed optical bandwidth pipes. The fundamental question is thus how to reconcile the competing flexibility versus speed requirements, and provide sufficient on-demand bandwidth to each user, while also satisfying quality of service challenges and energy constraints. In this presentation, the key technologies, and practical considerations for realizing the next-generation terabit Ethernet based optical network will be discussed, along with a survey of state-of-the-art research activities and promising future directions in this area.