One embodiment provides a system and method for managing traffic in a network that includes at least a passive optical network (PON). During operation, the system obtains traffic status associated with the PON, generates a traffic-shaping factor for the PON based on the traffic status, and applies traffic shaping for each optical network unit (ONU) within the PON using the generated traffic-shaping factor. The traffic-shaping factor determines a portion of a best-effort data rate to be provided to each ONU.