A method of localizing failures occurring along a transmission path is provided. A data signal is transmitted along the transmission path, which comprises a path segment. A first network node performs a tandem connection monitoring source function of a tandem connection. A second network node monitors the transmission along the path segment, by performing a tandem connection monitoring sink function. When the first network node detects a failure of the data signal, the first network node enters information indicating a data signal failure into the data signal's overhead field. When the second network node detects a failure by the tandem connection monitory sink function, the second network node enters information into the overhead field. When a third network node detects a failure of the data signal, the third network node uses the information in the overhead field to determine whether the failure occurred within or outside of the path segment.