I-design method is proposed that minimizes the deployment cost of a network when only a limited number of OXCs is capable of 3-R regeneration. Optimization, based on a given static-traffic matrix, is carried out by routing lightpaths with constrained signal degradation. Constraint-based routing and wavelength assignment is performed considering accumulation of noise due to amplified spontaneous emission of optical amplifiers as the major cause of signal degradation. A general multilayer design and optimization procedure is developed and applied to some case-study networks. The effects ofthe variation ofdesign parameters such as amplification-span length, wavelength conversion capability distribution and optical protection capability is investigated.