VXLAN VS. MPLS: From Data Centre to Metropolitan Area Network

In recent years, the advancement of cloud computing, virtualisation, and containerisation technologies has driven the adoption of network virtualisation. Both MPLS and VXLAN leverage virtualisation concepts to create logical network architectures, enabling more complex and flexible domain management. However, they serve different purposes. This article will compare VXLAN and MPLS, explaining why VXLAN is more popular than MPLS in metropolitan and wide area networks.

Understanding VXLAN and MPLS: Key Concepts Unveiled


Virtual Extensible LAN (VXLAN) encapsulates Layer 2 Ethernet frames within Layer 3 UDP packets, enabling devices and applications to communicate over a large physical network as if they were on the same Layer 2 Ethernet network. VXLAN technology uses the existing Layer 3 network as an underlay to create a virtual Layer 2 network, known as an overlay. As a network virtualisation technology, VXLAN addresses the scalability challenges associated with large-scale cloud computing setups and deployments.


Multi-Protocol Label Switching (MPLS) is a technology that uses labels to direct data transmission quickly and efficiently across open communication networks. The term “multi-protocol” indicates that MPLS can support various network layer protocols and is compatible with multiple Layer 2 data link layer technologies. This technology simplifies data transmission between two nodes by using short path labels instead of long network addresses. MPLS allows the addition of more sites with minimal configuration. It is also independent of IP, merely simplifying the implementation of IP addresses. MPLS over VPN adds an extra layer of security since MPLS itself lacks built-in security features.

Data Centre Network Architecture Based on MPLS

MPLS Layer 2 VPN (L2VPN) provides Layer 2 connectivity across a Layer 3 network, but it requires all routers in the network to be IP/MPLS routers. Virtual networks are isolated using MPLS pseudowire encapsulation and can stack MPLS labels, similar to VLAN tag stacking, to support a large number of virtual networks.

IP/MPLS is commonly used in telecom service provider networks, so many service providers’ L2VPN services are implemented using MPLS. These include point-to-point L2VPN and multipoint L2VPN implemented according to the Virtual Private LAN Service (VPLS) standard. These services typically conform to the MEF Carrier Ethernet service definitions of E-Line (point-to-point) and E-LAN (multipoint).

Because MPLS and its associated control plane protocols are designed for highly scalable Layer 3 service provider networks, some data centre operators have adopted MPLS L2VPN in their data centre networks to overcome the scalability and resilience limitations of Layer 2 switched networks, as shown in the diagram.

Why is VXLAN Preferred Over MPLS in Data Centre Networks?

Considering the features and applications of both technologies, the following points summarise why VXLAN is more favoured:

Cost of MPLS Routers

For a long time, some service providers have been interested in building cost-effective metropolitan networks using data centre-grade switches. Over 20 years ago, the first generation of competitive metro Ethernet service providers, like Yipes and Telseon, built their networks using the most advanced gigabit Ethernet switches available in enterprise networks at the time. However, such networks struggled to provide the scalability and resilience required by large service providers (SPs).

Consequently, most large SPs shifted to MPLS (as shown in the diagram below). However, MPLS routers are more expensive than ordinary Ethernet switches, and this cost disparity has persisted over the decades. Today, data centre-grade switches combined with VXLAN overlay architecture can largely eliminate the shortcomings of pure Layer 2 networks without the high costs of MPLS routing, attracting a new wave of SPs.

Tight Coupling Between Core and Edge

MPLS-based VPN solutions require tight coupling between edge and core devices, meaning every node in the data centre network must support MPLS. In contrast, VXLAN only requires a VTEP (VXLAN Tunnel Endpoint) in edge nodes (e.g., leaf switches) and can use any IP-capable device or IP transport network to implement data centre spine and data centre interconnect (DCI).

MPLS Expertise

Outside of large service providers, MPLS technology is challenging to learn, and relatively few network engineers can easily build and operate MPLS-based networks. VXLAN, being simpler, is becoming a fundamental technology widely mastered by data centre network engineers.

Advancements in Data Centre Switching Technology

Modern data centre switching chips have integrated numerous functions that make metro networks based on VXLAN possible. Here are two key examples:

  • Hardware-based VTEP supporting line-rate VXLAN encapsulation.
  • Expanded tables providing the routing and forwarding scale required to create resilient, scalable Layer 3 underlay networks and multi-tenant overlay services.

Additionally, newer data centre-grade switches have powerful CPUs capable of supporting advanced control planes crucial for extended Ethernet services, whether it’s BGP EVPN (a protocol-based approach) or an SDN-based protocol-less control plane. Therefore, in many metro network applications, specialised (and thus high-cost) routing hardware is no longer necessary.

VXLAN Overlay Architecture for Metropolitan and Wide Area Networks

Overlay networks have been widely adopted in various applications such as data centre networks and enterprise SD-WAN. A key commonality among these overlay networks is their loose coupling with the underlay network. Essentially, as long as the network provides sufficient capacity and resilience, the underlay network can be constructed using any network technology and utilise any control plane. The overlay is only defined at the service endpoints, with no service provisioning within the underlay network nodes.

One of the primary advantages of SD-WAN is its ability to utilise various networks, including broadband or wireless internet services, which are widely available and cost-effective, providing sufficient performance for many users and applications. When VXLAN overlay is applied to metropolitan and wide area networks, similar benefits are also realised, as depicted in the diagram.

When building a metropolitan network to provide services like Ethernet Line (E-Line), Multipoint Ethernet Local Area Network (E-LAN), or Layer 3 VPN (L3VPN), it is crucial to ensure that the Underlay can meet the SLA (Service Level Agreement) requirements for such services.

VXLAN-Based Metropolitan Network Overlay Control Plane Options

So far, our focus has mainly been on the advantages of VXLAN over MPLS in terms of network architecture and capital costs, i.e., the advantages of the data plane. However, VXLAN does not specify a control plane, so let’s take a look at the Overlay control plane options.

The most prominent control plane option for creating VXLAN Overlay and providing Overlay services should be BGP EVPN, which is a protocol-based approach that requires service configuration in each edge node. The main drawback of BGP EVPN is the complexity of operations.

Another protocol-less approach is using SDN and services defined in an SDN controller to programme the data plane of each edge node. This approach eliminates much of the operational complexity of protocol-based BGP EVPN. Nonetheless, the centralised SDN controller architecture, suitable for single-site data centre architectures, presents significant scalability and resilience issues when implemented in metropolitan and wide area networks. As a result, it’s unclear whether it’s a superior alternative to MPLS for metropolitan networks.

There’s also a third possibility—decentralised or distributed SDN, in which the SDN controller’s functionality is duplicated and spread across the network. This can also be referred to as a “controller-less” SDN because it doesn’t necessitate a separate controller server/device, thereby completely resolving the scalability and resilience problems associated with centralised SDN control while maintaining the advantages of simplified and expedited service configuration.

Deployment Options

Due to VXLAN’s ability to decouple Overlay services delivery from the Underlay network, it creates deployment options that MPLS cannot match, such as virtual service Overlays on existing IP infrastructure, as shown in the diagram. VXLAN-based switch deployments at the edge of existing networks, scalable according to business requirements, allow for the addition of new Ethernet and VPN services and thus generate new revenue without altering the existing network.

VXLAN Overlay Deployment on Existing Metropolitan Networks

The metropolitan network infrastructure shown in Figure 2 can support all services offered by an MPLS-based network, including commercial internet, Ethernet and VPN services, as well as consumer triple-play services. Moreover, it completely eliminates the costs and complexities associated with MPLS.

Converged Metropolitan Core with VXLAN Service Overlay


VXLAN has become the most popular overlay network virtualization protocol in data centre network architecture, surpassing many alternative solutions. When implemented with hardware-based VTEPs in switches and DPUs, and combined with BGP EVPN or SDN control planes and network automation, VXLAN-based overlay networks can provide the scalability, agility, high performance, and resilience required for distributed cloud networks in the foreseeable future.

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