A PON system capable of utilizing the bandwidth of an optical transmission channel in the PON section. In a PON system including an OLT and a plurality of ONUs, the OLT has: a downstream frame processing unit that removes at least part of the header information in a layer 2 header from a downstream frame received from a wide area network, and converts the remaining frame portion into a frame having a header specific to the PON section; and a downstream frame processing unit that extracts a downstream frame portion to be transferred to a user terminal, from a received frame from a PON, and adds the layer 2 header information deleted in the OLT.