In a dispersion compensation quantity setting technique for use in a WDM transmission system, a transmitting terminal node transmits CW light and modulated light obtained by modulation using a modulation pattern signal, while a receiving terminal node detects a physical quantity stemming from cross phase modulation occurring between the transmitting terminal node and the receiving terminal node on the basis of a variation of an intensity of the transmitted CW light and sets a dispersion compensation quantity on the basis of a variation of the detected physical quantity. Moreover, this optimizes the crosstalk, suppresses the output power of transmitted light, eliminates the nonlinear optical effect of the transmitted light, and carries out dispersion compensation superior in cost performance.