MPLS VPN services, types, and benefits

What is an MPLS VPN?

An MPLS VPN is the combination of multiprotocol label switching (MPLS) and virtual private network (VPN) technologies. It’s designed to deliver secure, scalable, and performance-optimized connections over a shared service provider backbone.

In an MPLS VPN network, data moves efficiently using label switching, while VRFs (virtual routing and forwarding) and route distinguishers keep each customer’s traffic separate. This setup allows for strong quality of service (QoS) capabilities and traffic engineering, which is difficult to achieve with regular internet-based VPNs.

How do MPLS VPNs work?

To keep customer data separate, MPLS VPNs use VRFs, which are essentially isolated routing tables per customer. Even if two companies use the same IP range (for example, 192.168.0.0/16), their data won’t cross paths. Route distinguishers (RDs) make it possible to distinguish between these identical IPs and ensure proper routing.

How does this differ from NordVPN? Like other consumer VPNs, NordVPN encrypts your traffic and tunnels it through a remote server. It changes your IP address and secures your online traffic. But it doesn’t offer the deterministic performance or traffic engineering of MPLS.

What are the types of MPLS VPNs?

MPLS VPNs come in two main types tailored to different network needs and levels of control. These are:

1. 1.Layer 2
2. 2.Layer 3

2. Layer 2

This layer includes point-to-point connections (VPWS) and multipoint connections (VPLS). A Layer 2 MPLS VPN operates at the data link layer. It emulates a private Ethernet connection over the service provider’s backbone.

3. Layer 3

The most common setup is the MPLS Layer 3 VPN (L3VPN). In this setup, the provider handles routing between customer sites using VRFs (Virtual Routing and Forwarding) and MP-BGP (Multiprotocol Border Gateway Protocol). BGP is a protocol used to exchange routing information between different networks on the internet, and MP-BGP extends this to carry VPN-specific routes across the provider’s network. This allows the provider to forward traffic between sites based on IP addresses securely and efficiently.

You don’t have to manage complex configurations or worry about overlapping IP ranges. That makes an MPLS L3 VPN a solid choice for large organizations that need a scalable, centralized solution without the overhead.

What is the difference between MPLS VPNs and traditional VPNs?

To understand the difference, it helps to start with the basics: What does a VPN do? Traditionally, a VPN creates an encrypted tunnel between your device and the VPN server, securing your traffic and changing your IP address. Consumer services like NordVPN (often ranked among the top VPN services for individuals) focus on privacy and protection on public networks.

MPLS VPNs, on the other hand, don’t rely on encryption. They run on a private service provider backbone, using label switching (MPLS) and routing isolation to keep traffic separate and predictable.

Is MPLS faster than a VPN?

That depends on what you mean by “faster.” MPLS VPNs can offer lower latency and jitter thanks to:

• Label switching. MPLS forwards packets based on labels instead of inspecting every packet’s IP header, speeding up processing.
• QoS policies. Critical traffic like VoIP or video gets priority.
• Private routing. This feature helps avoid the unpredictability of the public internet.

But that doesn’t mean every MPLS connection is faster than every VPN connection. Consumer services are fast, but still subject to internet congestion and ISP throttling. MPLS avoids that completely, but you pay for the difference.

What are the benefits of MPLS VPNs?

MPLS VPN solutions offer several advantages that make them a reliable choice for enterprise networks.

• Traffic isolation without encryption: Critical for industries with strict compliance requirements.
• Predictable performance: Great for VoIP, real-time collaboration, and mission-critical apps.
• Scalable network segmentation: Allows adding or removing sites without complex routing.
• End-to-end QoS: Guarantees bandwidth for important services.
• Supports overlapping IPs: Helpful when integrating acquisitions or partners.
• Centralized management: The provider handles most of the network complexity.

Compared to traditional site-to-site VPNs, MPLS VPNs offer a level of control and reliability that’s hard to match, especially across multiple countries or continents.

How does multiprotocol label switching work?

MPLS works by adding a numerical label to each data packet as it enters the network. These labels tell routers exactly where the data should go, avoiding the need to inspect full IP headers at every stop.

MPLS operates in the space between traditional data-link functions and network-layer routing. That’s why it’s often called a “Layer 2.5 protocol” — this informal term describes the fact that MPLS operates between the two layers.

Let’s break down the process:

1. 1.Label assignment. A data packet enters the MPLS network via the ingress router (also referred to as the label edge router). The ingress router tags the packet with a label that specifies its end-to-end path.
2. 2.Label distribution. The ingress router shares label-route mappings with others using the Label Distribution Protocol (LDP) or the Resource Reservation Protocol (RSVP).
3. 3.Label switching. As the packet travels through the MPLS network, each router (Label Switching Router or LSR) uses the label to decide the next hop. The router swaps the incoming label with a new outgoing label based on its forwarding table — this is the core label switching process.
4. 4.Label popping. As the packet nears the end of its MPLS path, the final MPLS label is removed by the second-to-last router. This process, known as penultimate hop popping, is done to reduce the processing burden on the egress router — the final router in the MPLS network, which is responsible for handing the packet off to its next destination.
5. 5.Label removal. At the egress router, now freed from MPLS labels, the packet is forwarded based on its IP header. This step marks the packet’s exit from the MPLS domain and its return to conventional IP routing.

In an MPLS VPN setup, each customer’s traffic is separated using VRFs and route distinguishers, ensuring private logical segmentation across a shared infrastructure. This means that Company A’s packets, even if they use the same IP range as Company B, remain completely isolated from each other.

What is multiprotocol label switching used for?

MPLS is used to streamline the packet-forwarding process within a network. It allows routers to save time deciphering the destination IP addresses, telling routers exactly where the packet is meant to go as soon as it reaches them. The result is improved speed and efficiency, lower latency, and less risk of network congestion.

It also lets administrators create pre-planned paths through their networks, strategically managing the flow of traffic. Without MPLS, an IP packet may take an unnecessarily long and inefficient route to its final destination. Once again, implementing MPLS leads to better overall performance on a network.

Another common application is to create private VPNs, especially Layer 3 MPLS VPNs. These let businesses connect multiple locations over a shared infrastructure while keeping traffic separate using VRFs and route distinguishers.

What is an MPLS network?

The term MPLS network refers to a network of preset paths, called label-switched paths (LSPs) — a network within a network. It's used to connect specific locations or users within a larger system. 

You might have 50 users on a wide- or local-area network, and of that 50, 10 are routing traffic to each other using MPLS labeling. The network between those 10 users and their machines is the MPLS network.

While this technically counts as a virtual private network, it is very different from what most people mean by VPN today. Services like NordVPN focus on encryption, increased privacy, and securing your IP across open networks. MPLS, by contrast, keeps traffic separate through infrastructure-based isolation.

Pros and cons of MPLS

Before deciding whether to use MPLS, consider the following benefits and disadvantages.

How MPLS ensures data privacy without encryption

Unlike traditional VPNs, MPLS VPNs don’t encrypt traffic. So how is privacy maintained?

• Virtual routing and forwarding keep each customer’s routing tables separate.
• Route distinguishers enable the use of overlapping IPs across customers.
• Multiprotocol BGP distributes VPN routing information across the network while maintaining separation.

This logical separation ensures that even though traffic travels the same fibre, it remains invisible and inaccessible to other tenants.

What’s the difference between SD-WAN and MPLS?

Software-defined wide-area networking (SD-WAN) is a software-based approach to managing a WAN. While it offers greater flexibility, stronger security options, and potential cost savings compared to MPLS, it’s not necessarily more advanced in every aspect. MPLS still provides consistent performance and low latency for real-time applications like voice and video.

Both label-switching networks and SD-WAN are used to connect users working from home securely with headquarters or remote branch offices.

From a VPN perspective, SD-WAN often uses IPSec tunnels to encrypt traffic over the public internet — similar to how consumer tools like NordVPN protect user traffic. MPLS, on the other hand, relies on traffic isolation across provider-managed infrastructure, without encryption.

Some IT specialists claim that in the future, MPLS will be pushed out by SD-WAN, but both systems have their use cases, and SD-WAN is unlikely to completely replace MPLS in all use cases.