This paper proposes a novel bandwidth arrangement for an Add/Drop Multiplexer (ADM) that minimizes the line capacity required in bi-directional ring networks wherein the ADMs are connected logically in a mesh topology. The technique, characterized by timeslotlwavelength conversion, realizes uniform add/drop processing common to all ADMs, regardless of their location on the ring. A self-healing algorithm is proposed for the network, which offers better performance than existing algorithms for SONET rings in terms of protection line capacity, restoration time, and survivability against multiple failures. Delay issue caused by the self-healing function is also considered.