Presently disclosed is an apparatus and method for returning control of bandwidth allocation and packet scheduling to the routing engine in a network communications device containing an ATM interface. Virtual circuit (VC) flow control is augmented by the addition of a second flow control feedback signal from each virtual path (VP). VP flow control is used to suspend scheduling of all VCs on a given VP when traffic has accumulated on enough VCs to keep the VP busy. A new packet segmenter is employed to segment traffic while preserving the first in, first out (FIFO) order in which packet traffic was received. Embodiments of the invention may be implemented using a two-level (per-VC and per-VP) scheduling hierarchy or may use as many levels of flow control feedback-derived scheduling as may be necessitated by multilevel scheduling hierarchies.