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A Layer 2 MPLS VPN is a term in computer networking. It is a method that Internet service providers use to segregate their network for their customers, to allow them to transmit data over an IP network. This is often sold as a service to businesses.

Layer 2 VPNs are a type of Virtual Private Network (VPN) that uses MPLS labels to transport data. The communication occurs between routers that are known as Provider Edge routers (PEs), since they sit on the edge of the provider's network, next to the customer's network.

Internet providers who have an existing Layer 2 network (such as ATM or Frame Relay)) may choose to use these VPNs instead of the other common MPLS VPN, Layer 3. There is no one IETF standard for Layer 2 MPLS VPNs. Instead, two methodologies may be used. Both methods use MPLS Headers to encapsulate data. However, they differ in the way they transport data.

The BGP-based type is based on a draft specification by Kireeti Kompella, from Juniper Networks. It uses the Border Gateway Protocol (BGP) as the mechanism for PE routers to communicate with each other about their customer connections. Each router connects to a central cloud, using BGP. This means that when new customers are added (usually to new routers), the existing routers will communicate with each other, via BGP, and automatically add the new customers to the service.

The second type is based on a draft specification by Luca Martini, formerly of Level 3 Communications (and now of Cisco Systems). This method is also known as a Layer 2 circuit. It uses the Label Distribution Protocol (LDP) to communicate between PE routers. In this case, every router will connect to every other router in the VPN, which differs from the BGP-based methodology.

• Juniper Networks: BGP-based (M/T/J-series)
• Juniper Networks: LDP-based (E-series)
• Cisco Systems: LDP-based
• Lucent Technologies (formerly Riverstone Networks): LDP-based
• Huawei Technologies: LDP-based & BGP-based (NE/S-series)

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