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We demonstrate a variable optical delay by using a recirculating loop that is controlled by all-optical signal processing technology. This concept can be utilized in all-optical recirculating buffers. The variable optical delay is realized by using an optical threshold function and a wavelength converter. We show that in case of packet contention, one optical packet is recirculated four times in the loop and when the contention disappears, the packet is routed out of the optical loop.