Complete MPLS Layer 2 VPN Configuration Guide Part 2 | Ethernet over MPLS, PPP over MPLS & Interworking MPLS

Complete MPLS Layer 2 VPN Ethernet, PPP and Interworking Configuration Guide Part 2

This is Part 2 of the MPLS Layer 2 VPN series where we continue exploring advanced MPLS Layer 2 VPN technologies using Cisco IOS routers.

📘 Previous Article

• Part 1 - Complete MPLS Layer 2 VPN Ethernet over MPLS Configuration Guide

In this tutorial we will configure:

• Ethernet over MPLS using physical interfaces
• PPP over MPLS pseudowires
• Ethernet to PPP Interworking MPLS
• xconnect pseudowire services
• EIGRP over MPLS Layer 2 VPN
• MPLS Layer 2 transport services
• Interworking IP pseudowires
• PPP encapsulation over MPLS

🎯 What You Will Learn

• Difference between Ethernet and PPP pseudowires
• How MPLS Layer 2 transport works
• How interworking converts Layer 2 encapsulations
• How Ethernet and PPP communicate through MPLS
• How xconnect creates virtual circuits
• How pseudowire-class works
• How EIGRP neighbors form over MPLS
• Verification and troubleshooting techniques

Table of Contents

• 1. MPLS Layer 2 VPN Overview
• 2. Ethernet over MPLS Using Physical Interfaces
• 3. Reset Previous Configurations
• 4. Configure CE Ethernet Interfaces
• 5. Configure PE xconnect Services
• 6. PPP over MPLS Concepts
• 7. Configure PPP CE Routers
• 8. Configure PPP MPLS Pseudowires
• 9. Ethernet PPP Interworking MPLS
• 10. Configure Interworking MPLS
• 11. Verification Commands
• 12. Packet Flow Analysis
• 13. MPLS Mathematics
• 14. Troubleshooting
• 15. Related Articles

1. MPLS Layer 2 VPN Overview

MPLS Layer 2 VPN allows service providers to transport Layer 2 frames across a Layer 3 MPLS backbone.

The customer edge devices believe they are directly connected even though the traffic traverses multiple Provider routers.

MPLS Transport Formula

$$ Customer\\ Frame \rightarrow MPLS\\ Labels \rightarrow MPLS\\ Core $$

Then:

$$ MPLS\\ Core \rightarrow Remove\\ Labels \rightarrow Original\\ Frame $$

2. Ethernet over MPLS Using Physical Interfaces

In Part 1 we used VLAN subinterfaces.

In this lab we simplify the configuration by using physical interfaces directly.

This demonstrates raw Ethernet transport across MPLS pseudowires.

3. Task 1 - Reset Previous Configurations

Before building the new topology, all PE-CE interfaces must be reset to default.

Code Example

default interface e0/1

This removes all previous interface configurations.

R1
default interface e0/1
default interface s1/0

R3
default interface e0/1
default interface s1/0

R4
default interface e0/0

R5
default interface e0/0

R6
default interface s1/0

R7
default interface s1/0

Why Default Interfaces?

Previous encapsulations, xconnects, and VLAN configurations can interfere with the new lab.

Defaulting interfaces ensures:

• Clean configuration state
• No hidden encapsulation mismatch
• No residual xconnect settings
• Proper pseudowire initialization

4. Configure CE Ethernet Interfaces

Now we configure direct Ethernet connectivity between R4 and R5 through the MPLS cloud.

R4 Configuration

R4

interface e0/0
 ip address 10.45.45.4 255.255.255.0
 no shutdown

R5 Configuration

R5

interface e0/0
 ip address 10.45.45.5 255.255.255.0
 no shutdown

Ethernet over MPLS Logic

The Provider Edge routers transport raw Ethernet frames between customer sites.

Customer routers are completely unaware of MPLS.

To the customer:

• The MPLS cloud behaves like a virtual Ethernet cable
• No routing occurs in the provider cloud
• The Provider only switches frames

Ethernet Frame Formula

$$ Frame = Header + Payload + Trailer $$

MPLS transports the complete Ethernet frame transparently.

5. Configure PE xconnect Services

Now we create the pseudowire between PE routers.

PVC ID 145 identifies the virtual circuit.

R1 Configuration

R1

interface e0/1
 xconnect 3.3.3.3 145 encapsulation mpls

R3 Configuration

R3

interface e0/1
 xconnect 1.1.1.1 145 encapsulation mpls

xconnect Deep Technical Explanation

xconnect builds a pseudowire tunnel between PE routers.

The command syntax:

xconnect remote-ip vc-id encapsulation mpls

means:

• remote-ip = remote PE loopback
• vc-id = pseudowire identifier
• encapsulation mpls = transport method

Both PE routers must use the same VC-ID.

Pseudowire Validation Formula

$$ PW_{UP} = \begin{cases} TRUE, & VC\\ IDs\\ Match \\\\ FALSE, & VC\\ IDs\\ Mismatch \end{cases} $$

6. PPP over MPLS Concepts

PPP over MPLS transports PPP frames across an MPLS backbone.

This is commonly used in:

• Legacy WAN migrations
• Serial connectivity extension
• Frame Relay replacements
• Service Provider WAN services

💡 Key PPP over MPLS Concept

The Provider network transports PPP frames transparently.

PPP encapsulation remains intact end-to-end.

7. Configure PPP CE Routers

R6 Configuration

R6

interface loopback0
 ip address 10.6.6.6 255.255.255.0

interface s1/0
 ip address 10.67.67.6 255.255.255.0
 encapsulation ppp
 no shutdown

router eigrp 67
 network 10.0.0.0

R7 Configuration

R7

interface loopback0
 ip address 10.7.7.7 255.255.255.0

interface s1/0
 ip address 10.67.67.7 255.255.255.0
 encapsulation ppp
 no shutdown

router eigrp 67
 network 10.0.0.0

PPP Encapsulation Explanation

PPP provides:

• Authentication
• Reliable framing
• Protocol multiplexing
• WAN encapsulation

PPP frames are transported through the MPLS pseudowire exactly as received.

PPP Frame Structure

$$ PPP\\ Frame = Flag + Address + Control + Protocol + Data + FCS $$

8. Configure PPP MPLS Pseudowires

R1 Configuration

R1

interface s1/0
 encapsulation ppp
 xconnect 3.3.3.3 167 encapsulation mpls
 no shutdown

R3 Configuration

R3

interface s1/0
 encapsulation ppp
 xconnect 1.1.1.1 167 encapsulation mpls
 no shutdown

PPP Pseudowire Logic

The PE routers:

• Receive PPP frames
• Encapsulate them inside MPLS
• Transport them across the MPLS core
• Restore original PPP frames at remote PE

PPP MPLS Encapsulation Formula

$$ PPP\\ Frame \rightarrow MPLS\\ Label\\ Stack $$

9. Ethernet PPP Interworking MPLS

Interworking MPLS allows different Layer 2 encapsulations to communicate across MPLS.

In this lab:

• R4 uses Ethernet
• R7 uses PPP
• MPLS interworking converts encapsulations

🎯 Why Interworking Exists

Service providers often connect customers using different WAN technologies.

Interworking allows seamless communication without forcing customers to redesign networks.

10. Configure Ethernet PPP Interworking MPLS

R4 Configuration

R4

interface e0/0
 ip address 10.47.47.4 255.255.255.0
 no shutdown

R7 Configuration

R7

interface s1/0
 ip address 10.47.47.7 255.255.255.0
 encapsulation ppp
 no shutdown

R1 Interworking Configuration

R1

pseudowire-class IW-R4-R7
 encapsulation mpls
 interworking ip

interface e0/1
 xconnect 3.3.3.3 147 pw-class IW-R4-R7
 no shutdown

R3 Interworking Configuration

R3

pseudowire-class IW-R4-R7
 encapsulation mpls
 interworking ip

interface s1/0
 encapsulation ppp
 xconnect 1.1.1.1 147 pw-class IW-R4-R7
 no shutdown

Interworking IP Explanation

The command:

interworking ip

allows PE routers to:

• Terminate Layer 2 encapsulation locally
• Extract IP packets
• Rebuild packets using remote encapsulation

This enables Ethernet and PPP devices to communicate.

Interworking Conversion Formula

$$ Ethernet\\ Frame \rightarrow IP\\ Packet \rightarrow PPP\\ Frame $$

MPLS Label Stack

$$ Outer\\ Label + Inner\\ Label + Payload $$

Where:

• Outer label = transport label
• Inner label = pseudowire/service label

11. Verification Commands

Verify xconnect

show xconnect all

Verify MPLS Forwarding

show mpls forwarding-table

Verify LDP Neighbors

show mpls ldp neighbor

Verify EIGRP Neighbors

show ip eigrp neighbors

Verify Interface Encapsulation

show interfaces

Sample Verification Output

R1#show xconnect all

Legend: XC ST = State

UP: local ready, remote ready

XC ST Segment 1 Segment 2
-------------------------------------------------
UP Et0/1 3.3.3.3 147

12. Packet Flow Analysis

Ethernet over MPLS Flow

1. R4 creates Ethernet frame
2. R1 receives frame
3. R1 encapsulates frame inside MPLS
4. MPLS core switches labels
5. R3 removes labels
6. R5 receives original Ethernet frame

PPP over MPLS Flow

1. R6 creates PPP frame
2. R1 encapsulates PPP frame inside MPLS
3. MPLS core transports labels
4. R3 removes labels
5. R7 receives original PPP frame

Interworking MPLS Flow

1. R4 sends Ethernet frame
2. R1 extracts IP payload
3. R1 converts payload for PPP transport
4. MPLS transports packet
5. R3 rebuilds PPP frame
6. R7 receives PPP frame

Frame Conversion Formula

$$ L2_{Ethernet} \rightarrow IP \rightarrow L2_{PPP} $$

13. MPLS Mathematics

Bandwidth Efficiency

$$ Efficiency = \frac{Payload}{Payload + Overhead} $$

Transport Delay

$$ Delay = Serialization + Propagation + Switching $$

Pseudowire Matching Formula

$$ VC\\ ID_{Local} = VC\\ ID_{Remote} $$

MPLS Forwarding Equation

$$ Forwarding = LFIB\\ Lookup + Label\\ Swap $$

EIGRP Metric Formula

$$ Metric = 256 \times \left( \frac{10^7}{Bandwidth} + Delay \right) $$

14. Troubleshooting

Problem	Cause	Solution
xconnect down	VC-ID mismatch	Verify pseudowire IDs
No MPLS labels	LDP issue	Verify LDP neighbors
PPP not operational	Encapsulation mismatch	Check PPP settings
No EIGRP neighbors	Pseudowire down	Verify xconnect state
Interworking failure	Missing pseudowire-class	Verify interworking ip

💡 Important Real-World MPLS Concepts

• Ethernet over MPLS transports Layer 2 Ethernet frames
• PPP over MPLS transports PPP frames
• Interworking converts encapsulations dynamically
• VC-ID must match on both PE routers
• Loopbacks provide stable LDP identities
• MPLS core remains transparent to customers

15. Related Articles

• Part 1 - Complete MPLS Layer 2 VPN Ethernet over MPLS Configuration Guide

Final Conclusion

This MPLS Layer 2 VPN Part 2 tutorial demonstrated advanced MPLS transport technologies including:

• Ethernet over MPLS
• PPP over MPLS
• Interworking MPLS
• xconnect pseudowires
• PPP encapsulation
• EIGRP over MPLS
• Pseudowire-class configurations
• Layer 2 encapsulation conversion

Understanding Ethernet, PPP, and Interworking MPLS technologies is extremely important for modern service provider networks and enterprise WAN migrations.