During the course of the last ten years optical transmission systems have more and more taken over the functions of their copper counterparts in the trunk network. However, replacement of copper-based transmission by optical-fibre-based transmission is only the first step in the utilisation of the large transmission capabilities of optical fibre.Deployment of optical fibres will penetrate further to the local loop to bring broadband and narrowband services directly to the customer. In the RACE 2024 project research is being undertaken towards a cost-effective broadband access facility (BAF) for the small business and residential customer and based on the asynchronous transfer mode (ATM). The paper highlights the characteristics of a suitable passive optical network to be used in the BAF system. Following an overview of the complete BAF system layout, attention is focused on the optical network, topology and realisation aspects.