Network coding is increasingly being investigated as an alternative to routing to increase throughput in packet networks. Like most data transfer schemes, the effectiveness of network coding may be limited by extreme congestion. When using network coding, these congested conditions are mitigated somewhat, but may still occur. We propose a selective channelization scheme in which links that experience congestion at a level that cannot be overcome by network coding are given reserved communication resources. This method has the following benefits. First, the algorithm proposed allows network coding full opportunity to overcome congestion before performing channelization, thus reducing the number of reserved resources used. Second, when triggered, the channelization of severely congested links greatly improves the end-to-end performance of flows that traverse the channelized link. To determine the point at which channelization should be triggered, we perform a thorough analysis of potential coding gains in a network facing errors due to collisions, and determine the point at which network coding loses its effectiveness.