The invention provides a network element and method for handling ATM traffic and TDM traffic. The network element handles TDM traffic carried on ATM cells, and ATM traffic, and comprises generating means for generating new ATM cells for transmitting ATM traffic. At least part of received ATM cells is inserted as payload into newly generated ATM cells. The Network element is connected on the one hand with a network (30) using both TDM traffic carried on ATM cells, and ATM cell traffic, and on the other hand via at least one PDH (PDHnullPlesiochronous Digital Hierarchy) transmission line (6) connected with a chain containing at least one second network element (1) using TDM traffic and at least one further network element (20) using ATM traffic. The PDH transmission line (6) carries groups of time slots with TDM traffic and groups of time slots carrying complete ATM cells.