Technology Genius

CHAPTER 1
Introduction

1.1 A Brief History of MPLS

MPLS was originally developed as a technology called Tag Switching to address performance differences between Layer 2 devices (switches) and Layer 3 devices (routers). This difference between switches and routers evaporated as hardware technology evolved. With the advent of wireless switches and routers, MPLS’s value of compensating for performance differences by adding labels between Layer 2 and Layer 3 was greatly diminished. Some service providers are now using MPLS to tunnel IP packets across different legacy and new network infrastructures. These networks may not be able to communicate with one another directly, so MPLS allows service providers to maximize their investments in existing capital equipment by creating one network from many. Although the underlying infrastructure is still a mix of different equipment, MPLS makes this aspect transparent so various assets can operate as one IP network. It should be noted here that Sprint has one large native-IP network and therefore has no need for MPLS in this capacity. MPLS also provides additional traffic engineering mechanisms such as control and path calculation. The practical use of these tools is to modify the traffic flow on a provider’s backbone.
In computer networking and telecommunications, Multi Protocol Label Switching (MPLS) is a data-carrying mechanism that belongs to the family of packet-switched networks. MPLS operates at an OSI Model layer that is generally considered to lie between traditional definitions of Layer 2 (Data Link Layer) and Layer 3 (Network Layer), and thus is often referred to as a "Layer 2.5" protocol. It was designed to provide a unified data-carrying service for both circuit-based clients and packet-switching clients which provide a datagram service model. It can be used to carry many different kinds of traffic, including IP packets, as well as native ATM, SONET, and Ethernet frames.
A number of different technologies were previously deployed with essentially identical goals, such as frame relay and ATM. MPLS is now replacing these technologies in the marketplace, mostly because it is better aligned with current and future technology needs.
In particular, MPLS dispenses with the cell-switching and signaling-protocol baggage of ATM. MPLS recognizes that small ATM cells are not needed in the core of modern networks, since modern optical networks (as of 2008) are so fast (at 40 Gbit/s and beyond) that even full-length 1500 byte packets do not incur significant real-time queuing delays (the need to reduce such delays — e.g., to support voice traffic — was the motivation for the cell nature of ATM).
At the same time, MPLS attempts to preserve the traffic engineering and out-of-band control that made frame relay and ATM attractive for deploying large-scale networks.
MPLS was originally proposed by a group of engineers from Ipsilon Networks, but their "IP Switching" technology, which was defined only to work over ATM, did not achieve market dominance. Cisco Systems, Inc. introduced a related proposal, not restricted to ATM transmission, called "Tag Switching" when it was a Cisco proprietary proposal, and was renamed "Label Switching" when it was handed over to the IETF for open standardization. The IETF work involved proposals from other vendors, and development of a consensus protocol that combined features from several vendors' work.
One original motivation was to allow the creation of simple high-speed switches, since for a significant length of time it was impossible to forward IP packets entirely in hardware. However, advances in VLSI have made such devices possible. Therefore the advantages of MPLS primarily revolve around the ability to support multiple service models and perform traffic management. MPLS also offers a robust recovery framework that goes beyond the simple protection rings of synchronous optical networking (SONET/SDH).
While the traffic management benefits of migrating to MPLS are quite valuable (better reliability, increased performance), there is a significant loss of visibility and access into the MPLS cloud for IT departments.

1.2 Multi-Protocol Label Switching (MPLS)

MPLS is a packet-forwarding technology which uses labels to make data forwarding decisions. With MPLS, the Layer 3 header analysis is done just once (when the packet enters the MPLS domain). Label inspection drives subsequent packet forwarding. MPLS provides these beneficial applications:

• Virtual Private Networking (VPN)
• Traffic Engineering (TE)
• Quality of Service (QoS)
• ATM over MPLS (AToM)

Additionally, it decreases the forwarding overhead on the core routers. MPLS technologies are applicable to any network layer protocol.

1.3 How MPLS works?

MPLS works by prefixing packets with an MPLS header, containing one or more 'labels'. This is called a label stack.
Each label stack entry contains four fields:

• A 20-bit label value..
• A 3-bit field for QoS (Quality of Service) priority (experimental).
• A 1-bit bottom of stack flag. If this is set, it signifies that the current label is the last in the stack.
• An 8-bit TTL (time to live) field.
These MPLS-labeled packets are switched after a Label Lookup/Switch instead of a lookup into the IP table. As mentioned above, when MPLS was conceived, Label Lookup and Label Switching were faster than a RIB lookup because they could take place directly within the switched fabric and not the CPU.
The entry and exit points of an MPLS network are called Label Edge Routers (LER), which, respectively, push an MPLS label onto the incoming packet and pop it off the outgoing packet. Routers that perform routing based only on the label are called Label Switch Routers (LSR). In some applications, the packet presented to the LER already may have a label, so that the new LSR pushes a second label onto the packet. For more information see Penultimate Hop Popping.
Labels are distributed between LERs and LSRs using the “Label Distribution Protocol” (LDP). Label Switch Routers in an MPLS network regularly exchange label and reachability information with each other using standardized procedures in order to build a complete picture of the network they can then use to forward packets. Label Switch Paths (LSPs) are established by the network operator for a variety of purposes, such as to create network-based IP Virtual Private Networks or to route traffic along specified paths through the network. In many respects, LSPs are no different than PVCs in ATM or Frame Relay networks, except that they are not dependent on a particular Layer 2 technology.
In the specific context of an MPLS-based Virtual Private Network (VPN), LSRs that function as ingress and/or egress routers to the VPN are often called PE (Provider Edge) routers. Devices that function only as transit routers are similarly called P (Provider) routers. The job of a P router is significantly easier than that of a PE router, so they can be less complex and may be more dependable because of this.
When an unlabeled packet enters the ingress router and needs to be passed on to an MPLS tunnel, the router first determines the forwarding equivalence class (FEC) the packet should be in, and then inserts one or more labels in the packet's newly-created MPLS header. The packet is then passed on to the next hop router for this tunnel.
When a labeled packet is received by an MPLS router, the topmost label is examined. Based on the contents of the label a swap, push (impose) or pop (dispose) operation can be performed on the packet's label stack. Routers can have prebuilt lookup tables that tell them which kind of operation to do based on the topmost label of the incoming packet so they can process the packet very quickly.
In a swap operation the label is swapped with a new label, and the packet is forwarded along the path associated with the new label.
In a push operation a new label is pushed on top of the existing label, effectively "encapsulating" the packet in another layer of MPLS. This allows hierarchical routing of MPLS packets. Notably, this is used by MPLS VPNs.
In a pop operation the label is removed from the packet, which may reveal an inner label below. This process is called "decapsulation". If the popped label was the last on the label stack, the packet "leaves" the MPLS tunnel. This is usually done by the egress router, but see PHP below.
During these operations, the contents of the packet below the MPLS Label stack are not examined. Indeed transit routers typically need only to examine the topmost label on the stack. The forwarding of the packet is done based on the contents of the labels, which allows "protocol-independent packet forwarding" that does not need to look at a protocol-dependent routing table and avoids the expensive IP longest prefix match at each hop.
At the egress router, when the last label has been popped, only the payload remains. This can be an IP packet, or any of a number of other kinds of payload packet. The egress router must therefore have routing information for the packet's payload, since it must forward it without the help of label lookup tables. An MPLS transit router has no such requirement.
In some special cases, the last label can also be popped off at the penultimate hop (the hop before the egress router). This is called Penultimate Hop Popping (PHP). This may be interesting in cases where the egress router has lots of packets leaving MPLS tunnels, and thus spends inordinate amounts of CPU time on this. By using PHP, transit routers connected directly to this egress router effectively offload it, by popping the last label themselves.
MPLS can make use of existing ATM network infrastructure, as its labeled flows can be mapped to ATM virtual circuit identifiers, and vice versa.

1.4 Label and its Structure.

A label is a short, four-byte, fixed-length, locally-significant identifier which is used to identify a Forwarding Equivalence Class (FEC). The label which is put on a particular packet represents the FEC to which that packet is assigned.

Figure 1.1 MPLS Label
• Label—Label Value (Unstructured), 20 bits
• Exp—Experimental Use, 3 bits; currently used as a Class of Service (CoS) field.
• S—Bottom of Stack, 1 bit
• TTL—Time to Live, 8 bits

1.5 Where will the label be imposed in a packet?

The label is imposed between the data link layer (Layer 2) header and network layer (Layer 3) header. The top of the label stack appears first in the packet, and the bottom appears last. The network layer packet immediately follows the last label in the label stack.

1.6 Label Switch Path

An LSP is a specific path traffic path through an MPLS network. An LSP is provisioned using Label Distribution Protocols (LDPs) such as RSVP-TE or CR-LDP. Either of these protocols will establish a path through an MPLS network and will reserve necessary resources to meet pre-defined service requirements for the data path.

1.7 Label Distribution Protocol

A label distribution protocol (LDP) is a specification which lets a label switch router (LSR) distributes labels to its LDP peers. When a LSR assigns a label to a forwarding equivalence class (FEC) it needs to let its relevant peers know of this label and its meaning and LDP is used for this purpose. Since a set of labels from the ingress LSR to the egress LSR in an MPLS domain defines a Label Switched Path (LSP) and since labels are mapping of network layer routing to the data link layer switched paths, LDP helps in establishing a LSP by using a set of procedures to distribute the labels among the LSR peers.

1.8 Forwarding Equivalence Class (FEC)

FEC is a group of IP packets which are forwarded in the same manner, over the same path, and with the same forwarding treatment. An FEC might correspond to a destination IP subnet, but it also might correspond to any traffic class that the Edge-LSR considers significant. For example, all traffic with a certain value of IP precedence might constitute a FEC.

1.9 Upstream label switch router (LSR) and Downstream LSR

A. Upstream and downstream are relative terms in the MPLS world. They always refer to a prefix (more appropriately, an FEC). These examples further explain this.
Figure 1.2 MPLS Upstream LSR
For FEC 10.1.1.0/24, R1 is the "Downstream" LSR to R2.
For FEC 10.1.1.0/24, R2 is the "Upstream" LSR to R1.
Figure 1.3 MPLS Downstream LSR
For FEC 10.1.1.0/24, R1 is the "Downstream" LSR to R2. And, R2 is the "Downstream" LSR to R3.
Figure 1.4 MPLS Upstream and Downstream LSR
For FEC 10.1.1.0/24, R1 is the "Downstream" LSR to R2. For FEC 10.2.2.0/24, R2 is the "Downstream" LSR to R1.
Data flows from upstream to downstream to reach that network (prefix).
Figure 1.5 MPLS Next Hop LSR
The R4 routing table has R1 and R2 as the "next-hops" to reach 10.1.1.0/24.

1.10 Downstream LSR

As data flows from upstream to downstream, so R3 is not a down stream LSR to R4 for 10.1.1.0/24

1.11 What do the terms incoming, outgoing, local, and remote mean when referring to labels?
Consider R2 and R3 in this topology. R2 distributes a label L for FEC F to R3. R3 uses label L when it forwards data to FEC-F (because R2 is his downstream LSR for FEC-F). In this scenario:
Figure 1.6 MPLS Label flow
• L is the incoming label for F on R2.
• L is the outgoing label for FEC-F on R3.
• L is the local binding for FEC F on R2.
• L is the remote binding for FEC-F on R3.

1.12 Can an LSR transmit/receive a native IP packet (non-MPLS) on an MPLS interface?

Yes, if the IP is enabled on the interface. Native packets are received/transmitted as usual. IP is just another protocol. MPLS packets have a different Layer 2 encoding. The receiving LSR is aware of the MPLS packet, based on the Layer 2 encoding.

1.13 Can an LSR receive/transmit a labeled packet on a non-MPLS interface?

No. Packets are never transmitted on an interface which is not enabled for that protocol. MPLS has a certain Ether type code associated with it (just as IP, IPX, and AppleTalk have unique Ether types). When a Cisco router receives a packet with an Ether type which is not enabled on the interface, it drops the packet. For example, if a router receives an AppleTalk packet on an interface which does not have AppleTalk enabled, it drops the packet. Likewise, if an MPLS packet is received on an interface which does not have MPLS enabled, the packet is dropped.

1.14 MPLS VPNs

Since MPLS allows for the creation of "virtual circuits" or tunnels, across an IP network, it is logical that service providers would look to use MPLS to provision Virtual Private Network services. Several standards have been proposed to allow service providers to use MPLS to provision VPN services that isolate a customers traffic across the provider's IP network and provide secure end-to-end connectivity for customer sites.
It should be noted that using MPLS for VPNs simply provides traffic isolation, much like an ATM or Frame Relay service. MPLS currently has no mechanism for packet encryption, so if customer requirements included encryption, some other method, such as IPsec, would have to be employed. The best way to think of MPLS VPNs is to consider them the equivalent of a Frame Relay or ATM virtual circuit.

1.15 MPLS Quality of Service

MPLS supports the same QoS capabilities as IP. These mechanisms are IP Precedence, Committed Access Rate (CAR), Random Early Detection (RED), Weighted RED, Weighted Fair Queuing (WFQ), Class-based WFQ, and Priority Queuing. Proprietary and non-standard QoS mechanisms can also be support but are not guaranteed to interoperate with other vendors.
Since MPLS also supports reservation of Layer 2 resources, MPLS can deliver finely grained quality of service, much in the same manner as ATM and Frame Relay.

1.16 Benefits of MPLS
1. MPLS provides the ability to forward packets over arbitrary non-shortest paths, i.e. it provides a circuit switching service in a hop-by-hop routed network.

2. For non-IP based networks such as ATM or frame relay, it provides a IP based control plane (routing, path selection, reservation) instead of technology specific control protocols MPLS thus provides a unifying control architecture for both connectionless and connection-oriented switching/routing hardware.

3. It provides a mechanism to group a related set of packets together by assigning a common “label” and isolating one group of packets from another. Thus, a label-switched path (LSP) can be setup to provide a generic tunneling service, e.g.
- connect segments of a VPN over a public network,
- interconnect two non-IP based networks (instead of say L2TP), or
- associate a common forwarding rule for packets sharing the same label, e.g. class of service. LSPs can be nested through the use of a label stack. LSPs can also be concatenated. MPLS provides for both point-to-multipoint and multipoint-to-point LSPs. The former is used for multicasting while the latter is used to aggregate traffic from multiple entry points onto a common exit point.

4. Labels have been defined for most layer2 technologies (Ethernet, PPP, ATM, frame relay) and as a result, MPLS services can be offered over a collection of heterogeneous networks.

5. The original motivation for MPLS was to enable fast switching, by replacing route lookup for a variable length IP destination address, with an exact match of a fixed, predefined number of bits. However, with the advent of fast route lookup algorithms and routing hardware, usefulness of MPLS in this regard is limited. Nevertheless, the use of labels to explicitly identify a common group of packets rather than matching variable parts of the packet header, may be useful in other contexts that require quick indexing into a table of rules. For example, packets that receive a common security inspection may be identified with a common label. Or, in load balancers for web-servers, connections that belong to a common session may be assigned a common label so that packets for that session are routed to the same server.

6. Since the interpretation of labels is independent of the control protocols, new protocols can easily be supported. The switching hardware typically supports the following operations:
- link a label with a packet scheduling behavior : this is currently under discussion where each label should represent a single behavior or whether specific bits in the label header encode specific behaviors.

7. MPLS provides networks with a more efficient way to manage applications and move information between locations. With the convergence of voice, video and data applications, business networks face increasing traffic demands. MPLS enables class of service (CoS) tagging and prioritization of network traffic, so administrators may specify which applications should move across the network ahead of others. This function makes an MPLS network especially important to firms that need to ensure the performance of low-latency applications such as VoIP and their other business-critical functions. MPLS carriers differ on the number of classes of service they offer and in how these CoS tiers are priced

1.17 Comparison of MPLS versus IP

MPLS cannot be compared to IP as a separate entity because it works in conjunction with IP and IP's IGP routing protocols. MPLS gives IP networks simple traffic engineering, the ability to transport Layer 3 (IP) VPNs with overlapping address spaces, and support for Layer 2 pseudo wires (with Any Transport Over MPLS, or ATOM - see Martini draft). Routers with programmable CPUs and without TCAM/CAM or another method for fast lookups may also see a limited increase in the performance.
MPLS relies on IGP routing protocols to construct its label forwarding table, and the scope of any IGP is usually restricted to a single carrier for stability and policy reasons. As there is still no standard for carrier-carrier MPLS it is not possible to have the same MPLS service (Layer2 or Layer3 VPN) covering more than one operator.

1.17.1 MPLS Traffic Engineering

MPLS Traffic Engineering provides benefits over a pure-IP network by allowing greater control over the spread of traffic in the network. The path of an LSP can either be (a) explicitly configured hop by hop, (b) dynamically routed by the Constrained Shortest Path First CSPF algorithm, or (c) configured as a loose route that avoids a particular IP or that is partly explicit and partly dynamic. In a pure IP network, the shortest path to a destination is chosen even when it becomes more congested. Meanwhile, in an IP network with MPLS Traffic Engineering CSPF routing, constraints such as the RSVP bandwidth of the traversed links can also be considered, such that the shortest path with available bandwidth will be chosen. MPLS Traffic Engineering relies upon the use of TE extensions to OSPF or IS-IS and RSVP. Besides the constraint of RSVP bandwidth, users can also define their own constraints by specifying link attributes and special requirements for tunnels to route (or to not route) over links with certain attributes.

1.17.2 MPLS local protection (Fast Reroute)

In the event of a network element failure when recovery mechanisms are employed at the IP layer, restoration may take several seconds which is unacceptable for real-time applications (such as VoIP). In contrast, MPLS local protection meets the requirements of real-time applications with recovery times comparable to those of SONET rings (up to 50ms).

1.18 Comparison of MPLS versus Frame Relay

Frame relay aimed to make more efficient use of existing physical resources, which allow for the under provisioning of data services by telecommunications companies (telcos) to their customers, as clients were unlikely to be utilizing a data service 100 percent of the time. In more recent years, frame relay has acquired a bad reputation in some markets because of excessive bandwidth overbooking by these telcos.
Telcos often sell frame relay to businesses looking for a cheaper alternative to dedicated lines; its use in different geographic areas depended greatly on governmental and telecommunication companies' policies. Some of the early companies to make frame relay products included Strata COM (later acquired by Cisco Systems) and Cascade Communications (later acquired by Ascend Communications and then by Lucent Technologies).

1.19 Comparison of MPLS versus ATM

While the underlying protocols and technologies are different, both MPLS and ATM provide a connection-oriented service for transporting data across computer networks. In both technologies, connections are signaled between endpoints, connection state is maintained at each node in the path, and encapsulation techniques are used to carry data across the connection. Excluding differences in the signaling protocols (RSVP/LDP for MPLS and PNNI for ATM) there still remain significant differences in the behavior of the technologies.
The most significant difference is in the transport and encapsulation methods. MPLS is able to work with variable length packets while ATM transports fixed-length (53 byte) cells. Packets must be segmented, transported and re-assembled over an ATM network using an adoption layer, which adds significant complexity and overhead to the data stream. MPLS, on the other hand, simply adds a label to the head of each packet and transmits it on the network.
Differences exist, as well, in the nature of the connections. An MPLS connection (LSP) is uni-directional - allowing data to flow in only one direction between two endpoints. Establishing two-way communications between endpoints requires a pair of LSPs to be established. Because 2 LSPs are required for connectivity, data flowing in the forward direction may use a different path from data flowing in the reverse direction. ATM point-to-point connections (Virtual Circuits), on the other hand, are bi-directional, allowing data to flow in both directions over the same path (bi-directional are only svc ATM connections; PVC ATM connections are uni-directional).
Both ATM and MPLS support tunneling of connections inside connections. MPLS uses label stacking to accomplish this while ATM uses Virtual Paths. MPLS can stack multiple labels to form tunnels within tunnels. The ATM Virtual Path Indicator (VPI) and Virtual Circuit Indicator (VCI) are both carried together in the cell header, limiting ATM to a single level of tunneling.
The biggest single advantage that MPLS has over ATM is that it was designed from the start to be complementary to IP. Modern routers are able to support both MPLS and IP natively across a common interface allowing network operators great flexibility in network design and operation. ATM's incompatibilities with IP require complex adaptation making it largely unsuitable in today's predominantly IP networks.

1.20 Comparison of MPLS vs Ethernet VPN vs IP WAN

MPLS helps to improve productivity via management of a single network. There are companies which want to retain their IP Routing, hence they would choose an Ethernet VPN solution vs. MPLS. However, there are often hard to reach locations not fully supported by land fiber. Hence the integration of satellite IP, BGAN and MVSAT with an MPLS backbone will enable coverage using IP technology into seemingly hard to reach locations, covering both land and sea. This is also known as IP WAN.

1.21 Competitors to MPLS

MPLS can exist in both IPv4 environment (IPv4 routing protocols) and IPv6 environment (IPv6 routing protocols). The major goal of MPLS development - the increase of routing speed - is no longer relevant because of the usage of ASIC, TCAM and CAM-based switching. Therefore the major usage of MPLS is to implement limited traffic engineering and Layer 3/Layer 2 “service provider type” VPNs over existing IPv4 networks. The only competitors to MPLS are technologies like L2TPv3 that also provide services such as service provider Layer 2 and Layer 3 VPNs.

CHAPTER 2
Design and Implementation of MPLS

2.1 MPLS VPN Basic Architecture

The basic network Architecture of MPLS VPN is shown in the following diagram.
Figure 2.1 MPLS VPN Network (First Look)

A second look at the MPLS VPN network with more elaborate detail will take the following shape.
Figure 2.2 MPLS VPN Network (Second Look)
In Figure 2.2 the symbols used have following meaning.

1. CE Customer equipment 1
2. PE Service provider edge router (ingress LSR)
3. P Service provider router within the core of the network of the service provider
4. P Service provider router within the core of the network of the service provider
5. PE Service provider edge router (egress LSR)
6. CE Customer equipment 2.

Note:
Customer Edge (CE) router—a router that belongs to a customer network, which connects to a Provider Edge (PE) router to utilize MPLS VPN network services.
Provider Edge (PE) router—the PE router is the entry point into the Service Provider network. The PE router is typically deployed on the edge of the network and is administered by the Service Provider. The PE router is the redistribution point between EIGRP and BGP in PE to CE networking.

PE1 and PE2 are at the boundaries between the MPLS network and the IP network.
In Figure 2.1, the following behavior occurs:
• Packets arrive as IP packets at PE1, the provider edge router (also known as the ingress label switching router).
• PE1 sends the packets as MPLS packets.
• Within the service provider network, there is no IP Precedence field for the queuing mechanism to look at because the packets are MPLS packets. The packets remain MPLS packets until they arrive at PE2, the provider edge router.
• PE2 removes the label from each packet and forwards the packets as IP packets.

This MPLS QoS enhancement allows service providers to classify packets according to their type, input interface, and other factors by setting (marking) each packet within the MPLS experimental field without changing the IP Precedence or DSCP field. For example, service providers can classify packets with or without considering the rate of the packets that PE1 receives. If the rate is a consideration, the service provider marks in-rate packets differently from out-of-rate packets.

2.2 Customer Edge Router

Typically in a branch office, the Cisco 2600 series serves as the CE router.

2.3 Provider Edge Routers

PE routers exchange routing information with CE routers using static routing, RIPv2, OSPF, or EIGRP. While a PE router maintains VPN routing information, it is only required to maintain VPN routes for those VPNs to which it is directly attached. This design eliminates the need for PE routers to maintain all of the service provider's VPN routes.
The following is a list of router platforms supported at the provider core.
1. Cisco 3700 Series
2. Cisco 7200 series
3. Cisco 7500 series

2.4 Provider Routers

A provider (P) router is any router in the provider's network that does not attach to CE devices. P routers function as MPLS transit LSRs when forwarding VPN data traffic between PE routers. Since traffic is forwarded across the MPLS backbone using a two layer label stack, P routers are only required to maintain routes to the provider's PE routers; they are not required to maintain specific VPN routing information for each customer site. The following is a list of router platforms supported at the provider core.
1. Cisco 8540 series
2. Cisco 8800 series
3. Cisco 12000 series

2.5 LSP Establishment

In order to use MPLS to forward VPN traffic across the provider's backbone, LSPs must be established between the PE router that learns the route and the PE router that advertises the route.
Figure 2.3 LSP Establishment of MPLS
LSPs are established across the service provider's network using one of the following techniques.
• Label Distribution Protocol (LDP) for assigning labels associated with the PE loop back.
• BGP for assigning VPN specific labels
• Resource Reservation Protocol (RSVP) for traffic engineering tunnels
Note that there can be a single LSP or several parallel LSPs (perhaps with different QoS capabilities) established between PE routers. Also, note that it is possible to use RSVP to assign labels for PE loopbacks, although this is not recommended. LDP provides more flexibility and is less manually intensive to configure.

2.6 Traffic Flow

Figure 4 shows the flow of VPN traffic across the service provider's backbone from one customer site to another customer site. Assume that Host 1.2.3.4 at Site 2 wants to communicate with Server 2.1.3.8.

Figure 2.4 Traffic Flow of MPLS
Host 1.2.3.4 forwards all data packets for Server 2.1.3.8 to its default gateway. When a packet arrives at CE 2, it performs a longest-match route lookup and forwards the IPv4 packet to PE 2.
PE 2 receives the packet, performs a route lookup in VRF Green. User traffic is forwarded from PE 2 to PE 1 using MPLS with a label stack containing two labels. For this data flow, PE 2 is the ingress LSR for the LSP and PE 1 is the egress LSR for the LSP. Before transmitting a packet, PE 2 pushes the label, 426 in this example, onto the label stack making it the bottom (or inner) label. This label is originally installed in VRF Green when PE 2 receives PE 1's IBGP advertisement for the route 12.1/24. Next, PE 2 pushes the label stack making it the top (or outer) label. When the packet arrives from CE2, PE2 inserts a VPN label for that customer (inner label), does a lookup in the proper VPN FIB (LFIB), and then inserts a label for forwarding to PE1 (outer label).
After creating the label stack, PE 2 forwards the MPLS packet on the outgoing interface to the first P router along the LSP from PE 2 to PE 1. P routers switch packets across the core of the provider's backbone network based on the top (outer) label. The penultimate router to PE 1 pops the top label (exposing the bottom or inner label) and forward the packet to PE 1.
When PE 1 receives the packet, it pops the label creating a native IPv4 packet. PE 1 uses the bottom label (426) to identify the directly attached CE that is the next hop to 12.1/16. Finally, PE 1 forwards the native IPv4 packet to CE 1, which forwards the packet to Server 2.1.3.8 at Site 1.

2.7 International Connectivity for MPLS VPN

For international connectivity, initially one STM1 (155Mbps) on PTCL’s SMW4 Wholly Assigned Capacity (WAC) upto M/s Verizon Business Global Data Link (GDL) will be established. Subject to extra demand this bandwidth can be increased as per requirement.

2.8 MPLS- Tariff and Expected Business

The tariff for MPLS is cost based and roughly falls between the IP and IPLC tariff. IPLC is a hard patched point to point physical media and provides the best Quality of service and security. IP bandwidth provides much cheaper solution but as it provides shared bandwidth, QoS is not as good as IPLC. A comparison of the tariff of IPLC, IP and MPLS is as follows,
No. Data Rate IPLC Tariff [2] IP Tariff [2] MPLS Tariff Proposed
1 512K 1750 560 1500
2 1024K 3000 960 2500
3 2048K 5000 1600 4000
4 45 Mb 74970 24000 60000
5 155Mb 154940 49600 124000
Note:
1. Rates are in US Dollars
2. Proposed MPLS Tariff is distance based. Given Tariff is upto France.
It is expected that the MPLS VPN service will generate a healthy revenue of more than five million US Dollars annually. As the MPLS platform roles out gradually to accommodate additional services such as voice and video service, it will become a major money spinner for PTCL generating an amount to the north of 15 million US dollar annually.

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