What is MPLS and How Does it Work? | NBC Cloud

What is MPLS and How Does it Work?

August 31, 2023

NBC Cloud outlines what an MPLS network is, its inner workings, key components and how this network is utilised by businesses to enhance the reliability of their network infrastructures. Whether you are a business professional looking to optimise your network’s architecture or are simply looking for information on the mechanisms of an MPLS network, this article aims to outline all the key information you will need. 

What is MPLS?

MPLS meaning

MPLS stands for Multiprotocol Label Switching and is a network technology for routing traffic. MPLS gets its name as it uses ‘labels’ rather than network sources or destination addresses to route traffic along the shortest possible path to offer fast speeds and minimise downtime. 

These ‘labels’ are assigned to each individual data packet, whereby the pre-assigned label determines which path the packet is then routed to. MPLS essentially allows businesses to separate their traffic based on the performance requirements of each application and purpose. 

How does MPLS work?

The first time a data packet or application enters the network, it is assigned a Forwarding Equivalence Class (FEC) or Class of Service (CoS) for forwarding, which determines the Label-Switched Path (LSP) the packet will be routed to. 

Once all data packets have been assigned a label, when these return to the network, the traffic will be immediately routed to those pre-determined paths. This eliminates a step from the process as there is no need for the network to review the packet’s network address and then route them accordingly, hugely cutting down on connection speeds. 

Businesses can decide what to use as classes and packets are usually grouped into classes with similar characteristics. For example, any applications relating to VoIP or video calls and communications would likely need to be classed in a way that ensures they are routed to the fastest path.

What are the components of an MPLS network?

There are five elements that make up the architecture of an MPLS.

1. Ingress Label Edge Router (LER)

This element is the point of entry for the data packets, that assigns the labels and subsequently begins the routing of the packets accordingly. 

2. Forward Equivalence Class (FEC) 

As mentioned above, this element is comprised of a group of related data packets that are assigned the same label and therefore follow the same routing path. These packets generally have the same service requirement and therefore require the same speed and connectivity performance.

3. Label Switch Router (LSR)

This element has various functions including:

4. Label Switch Path (LSP)

This component is responsible for ensuring that the transfer of data packets only moves in one direction from the origin (ingress router) to the final destination (egress router). 

5. Egress Label Edge Router (LER)

This component is the final destination and exit point for data packets once they’ve reached their final destination.

How does MPLS differ from traditional routing protocols?

While MPLS works by assigning labels and then directing traffic via pre-defined routes to offer the shortest speeds possible, traditional internet routing protocols work by routing packets from one network to another until they reach the final destination. At this final destination, which is determined by a packet’s IP address, the network then has to identify the address and device that the packet needs forwarding to. 

This approach requires routers to review a packet’s headers as well as a routing table which contains information on how to forward each packet, and then make a decision as to where to forward the packet accordingly. This traditional routing protocol works effectively for the majority of purposes for providing internet connections, however, it can be slower due to the router having to make a new individual decision for every packet that enters the network. 

MPLS, on the other hand, routes packets via their set LSP each time. If businesses require faster speeds, and minimal downtime, or prefer to have full control over how their traffic is routed, MPLS is a suitable alternative.

What are the components of an MPLS network label?

MPLS labels are comprised of four main parts which act as a set of instructions for routers, these include:

The information contained within these labels guides the label switch routers and determines where the packet is routed through and eventually delivered. 

What are MPLS networks used for?

MPLS networks are used by businesses that require faster and more reliable speeds, and those that require more control over their internet connections. 

An instance of an MPLS network being preferable over a traditional network is organisations and large enterprises that have multiple physical offices or bases in different locations and need to be able to connect to a headquarters network quickly and reliably.  Another example is businesses that rely heavily on ‘real-time’ data and applications day-to-day as a key function, such as voice and video communication. 

Pros and cons of MPLS networks



Although in previous years MPLS networks have been used as a reliable alternative to traditional network connections, the method is becoming less used due to the expenses associated and its lack of compatibility with the cloud. Cons for businesses when using an MPLS network include:

As an increasing number of businesses move towards using cloud-based solutions, they are moving away from MPLS networks, or using them as part of a hybrid approach, so they can connect directly with the cloud, skip the additional step and improve speed performance. There are now improved network types available that are designed to be compatible with the cloud, such as Software-Defined Wide Area Networks (SD-WANs) that businesses are increasingly opting for instead of or in conjunction with MPLS. 

MPLS networks vs. SD-WAN networks

These days, businesses will often decide between MPLS or SD-WAN networks, however, the two can co-exist together to effectively meet the needs of different business types and sizes. Businesses can choose to use either of these networks, depending on their needs, or they can utilise both types of networks for a blended, hybrid approach. 

MPLS networks have seen decreases in usage in recent years due to their lack of compatibility with the cloud, however, they have by no means been made redundant. Many businesses who have already invested in the set-up and running of MPLS networks will continue to utilise them, as well as businesses that require the increased control of being able to reliably connect various physical business locations point-to-point.

Where MPLS networks fall short in cloud connectivity, SD-WAN networks can be used in conjunction to pick up the slack. Actually, when used in a hybrid approach, SD-WAN can help businesses to better utilise their MPLS connections by allowing them to dynamically and efficiently route traffic for cloud-based applications using the MPLS connection.

Implications of MPLS networks for businesses

MPLS networks can provide businesses with a high-performing, reliable and scalable network solution, however, this does come with increased costs. Businesses therefore must weigh up their business model, budgets and network requirements to make educated decisions about whether they require an MPLS or can rely on a more affordable traditional business broadband connection to meet their needs.

For businesses that have already invested in complex MPLS infrastructures and have them running efficiently, it is advised to keep these in place and have them work in conjunction with newer networks like SD-WANs where needed.

NBC Cloud offers a range of business communication services to help streamline and improve the speeds and reliability of internet connections, including VoIP technology and superfast business broadband. Browse our services today, check availability, or speak to a member of our team for a quick quote and more information.


Is MPLS a private network?

Yes, MPLS technically can be deemed private as it is isolated from public internet connections and allows businesses to create segregated, controlled network paths for data packets. However, MPLS isn’t a completely private network as it doesn’t provide encryption or data protection measures automatically once set up, these must be configured separately by a business.

Is MPLS dead?

MPLS networks are by no means dead, they are instead increasingly being used in an adaptive and hybrid manner in line with evolving technologies such as the cloud. With the widespread adoption of cloud computing and Software-Defined Networks like SD-WAN, MPLS networks have become less dominant however are still heavily utilised by larger organisations with multiple locations that require reliable, low-latency connectivity. 

Rather than being used as a sole networking solution, businesses are more often utilising MPLS for its strengths such as Quality of Service and increased traffic control, in conjunction with SD-WANs or other more recent technologies. Rather than dying out, MPLS has been adapted to coexist with newer cloud networks. 

Is MPLS a layer 2 or 3 network?

MPLS networks operate at both Layer 2 and Layer 3 of the Open Systems Interconnection (OSI) model, with this being dependent on the type of use and how it is configured. MPLS doesn’t fit into Layer 2 or Layer 3 independently and instead offers features of both to offer businesses a flexible and efficient networking environment.

At Layer 2, MPLS networks function as a data-link layer protocol as they use labels to make traffic routing decisions. At Layer 3, MPLS routers exchange directing information to build LSPs and direct packets along pre-determined paths.

Is MPLS a LAN or a WAN?

MPLS networks are highly versatile and can be utilised in both Local Area Networks (LANs) and Wide Area Networks (WANs). 

In a LAN context, MPLS can enhance the efficiency and quality of data transfer. For example, it allows businesses to prioritise certain types of traffic that require low latency and increased reliability to ensure their network is being utilised efficiently.

In a WAN context, MPLS is hugely valuable for establishing connections between different geographic locations, whether a business has multiple offices, data centres, or branches that require a reliable, fast connection at all times. MPLS can also be used to create VPNs for instances where businesses require a certain level of privacy. 

Ultimately, MPLS networks can be used in either a LAN or WAN environment, dependent on the nature of a business’s networking requirements such as the scalability, level of control, security and performance. 

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