A system and method for reducing bottleneck queues in the O-RAN architecture through classification of a PDCP queue at a CU-UP server with a CU Congestion Indicator, and classification of a RLC queue at a DU server with a DU Congestion Indicator. The CU Congestion Indicator determines a category for the PDCP queue for a DRB, x and the DU Congestion Indicator determines a category for the RLC queue for a DRB, y. The DU server transmitting the CE indication to UE when the CU Congestion Indicator or the DU Congestion Indicator classifies the DRB x or DRB y as CE, which in turn, communicates a congestion occurrence to an application source. The application source modifies a data rate for data traffic that is sent to the UE based on the CE indication.