The layer 1 virtual private network framework has emerged from the need to enable the dynamic coexistence of multiple circuit-switched client networks over a common physical network infrastructure. Such a VPN could be set up for an enterprise with offices across a wide geographical area (e.g., around the world or by a global ISP). Additionally, emerging IP over optical WDM technologies let IP traffic be carried directly over the optical WDM layer. Thus, different VPNs can share a common optical WDM core, and may demand different amounts of bandwidth at different time periods. This type of operation would require dynamic and reconfigurable allocation of bandwidth. This article evaluates the state of the art in layer I VPNs in the context of globally deployable optical networks and cost-efficient dynamic bandwidth usage. While exploiting the dynamism of IP traffic in a global network in which the nodes are located in different time zones, we study different bandwidth allocation methods for setting up a worldwide layer 1 VPN. We propose and investigate the characteristics of a cost-efficient bandwidth provisioning and reconfiguration algorithm, called Capacity Allocation Using Time Zones (CATZ).