We consider the problem of interconnecting a set of customer sites using bidirectional SONET rings of equal capacity. Each site is assigned to exactly one ring and a special ring, called the federal ring, interconnects the other rings together. The objective is to minimize the total cost of the network subject to a ring capacity limit where the capacity of a ring is determined by the total bandwidth required between sites assigned to the same ring plus the total bandwidth request between these sites and sites assigned to other rings.We present exact, integer-programming based solution techniques and fast heuristic algorithms for this problem. We compare the results from applying the heuristic algorithms with those produced by the exact methods for real-world as well as randomly generated problem instances. We show that two of the heuristics find solutions that cost at most twice that of an optimal solution. Empirical evidence indicates that in practice the algorithms perform much better than their theoretical bound and often find optimal solutions.