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Layer 2 vs. Layer 3 MPLS

What is MPLS?

Multi Protocol Label Switching (MPLS) is an IETF (Internet Engineering Task Force) government-approved wide area networking standard created to:

  • Help carriers and large corporations scale their networks as increasingly large routing tables become more complex to manage
  • Combine flexible any-to-any communication found on PSTN or the internet with the reliability and security delivered by a private line, frame relay or ATM services
  • Offer differentiated performance levels and prioritisation of delay and non-delay sensitive traffic, as well as voice and multimedia applications, all on a single network
  • Address traffic management issues by prioritising time-sensitive applications

MPLS is available in three types: 

  1.  Layer 2 point-to-point
  2.   Layer 3 IP VPN
  3.  Layer 2 VPLS

MPLS Layer 2 Point to Point

Layer 2 point-to-point is a cost-effective way and a flexible alternative to high bandwidth leased lines. Many wholesale network operators have based their core network infrastructure on ethernet and use Layer 2. This type of transport is protocol-agnostic and allows anything running over the LAN to be sent over the WAN without having to use routers to convert packets up to Layer 3, the network layer.

MPLS Layer 2 Virtual Private LAN Services (VPLS)

Virtual Private LAN services are growing in popularity for delivering ethernet services. They combine MPLS and ethernet,  allowing both customers and carriers to benefit. For over two decades, ethernet switching has dominated the local area network, while IP routing has dominated the carrier network. IP backbones have been used to provide Internet access and, more recently, to provide IP VPN access. Corporate VPN services have been typically provided with existing TDM, ATM and Frame Relay Networks. During this period, Ethernet has continued to scale the bandwidth spectrum and with its simplicity and cost-effectiveness, it has established itself as the infrastructure of choice in the metro and the WAN.

Otherwise known as transparent ethernet services, VPLS is a newer protocol that works over MPLS and gives customers a combination of the benefits of the two above network types, i.e. the ability to operate a multipoint network AND pass all traffic at Layer 2 over the WAN. Due to its simplicity, robustness and ability to scale traffic to 10 Gbps.

Advantages of Layer 2

  • A transparent interface – no router hardware investment required for bandwidth upgrades
  • Layer 2 means that traffic is tagged by MAC address, as opposed to an IP address
  • Low latency – switched as opposed to routed
  • Plug & Play for ease of deployment: no configuration required for new sites, which appear like new devices on a LAN.

Disadvantages of Layer 2

  • No router hardware means Layer 2 networks are susceptible to broadcast storms
  • Extra administrative overhead of IP allocations due to flat subnet across multiple sites
  • No visibilty from the provider, therefore monitoring services can be difficult


Particularly suitable for vast, multi-site enterprises, i.e. retail chains, that deploy a large number of low bandwidth sites or large corporates with offices deployed globally. This type of service is a natural progression away from legacy frame relay and ATM services.

Advantages of MPLS Layer 3 IP/VPN

  • IP/VPNs are extremely scalable for fast deployment
  • ‘any to any’ connectivity: a shorter hop count between two local sites is more efficient than – ‘tromboning’ back into a central point. This is especially relevant for global networks where latency is increased as packets travel over long geographical distances.
  • preparing for voice and data convergence: to implement a blanket ‘class of service’ prioritisation based on traffic type is made simple across multi-site networks.

Disadvantages of MPLS Layer 3 IP/VPN

  • The core infrastructure becomes expensive when routing links over 100 Mbps.
  • Increased costs due to requiring customer router hardware.
  • Class of Service (CoS) and Quality of Service (QoS) usually incur additional fees.
  • Modifications to IP addressing would have to be submitted to the carrier.


In summary, both Layer 2 and Layer 3 services have their advantages and disadvantages. The solution that needs to be provided is dependent on what access you will choose. GCOMM recommends Layer 3 MPLS due to its ability to scale and provide monitoring for troubleshooting.