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Dynamic spectrum management (DSM) refers to a wide range of techniques for counteracting crosstalk in digital subscriber line (DSL) networks. DSM is categorized into three levels based on the degree of coordination among users. In this article, we investigate optimal joint level 2 and 3 DSM for upstream DSL. We will discuss the difficulties of finding the universally optimal solution and we propose an optimal algorithm, referred to as IF/MAC-OSB, under some practical and implementation assumptions for this problem. Using computer simulations, we show that IF/MAC-OSB is capable of increasing the user bit rates considerably compared to several other DSM techniques. The proposed algorithm involves using the minimum mean squared error (MMSE)-generalized decision feedback equalizer (GDFE) together with Lagrange dual optimization. We address several aspects of the problem including the optimal decoding order in the GDFE receiver, GDFE error propagation, and the computational complexity of the algorithm. We also study effects of channel model randomness and upstream power back-off utilization on the performance of the algorithm. [ABSTRACT FROM AUTHOR]