Why VXLAN Is Outpacing MPLS for Metro and WAN Networks

Background

Recent advances in cloud computing, virtualization, and containerization have driven the adoption of network virtualization technologies. Both MPLS and VXLAN use virtualization concepts to express logical network architectures, but they address different requirements.

What Is MPLS?

Multiprotocol Label Switching (MPLS) is a label‑based forwarding technology that works over open communication networks. It supports multiple network‑layer protocols and can also carry various data‑link layer technologies. MPLS simplifies data transport between two nodes by replacing long network addresses with short path labels, requires minimal configuration to add sites, and is IP‑agnostic. MPLS over VPN adds an extra security layer, though MPLS itself lacks built‑in security features.

What Is VXLAN?

Virtual Extensible LAN (VXLAN) encapsulates Layer‑2 Ethernet frames inside Layer‑3 UDP packets, allowing devices and applications to communicate over a large physical network as if they were on the same Ethernet segment. VXLAN builds a virtual Layer‑2 overlay on top of an existing Layer‑3 underlay.

Why VXLAN Is Preferred in Data‑Center Networks

Routers that support MPLS are generally more expensive than data‑center three‑tier switches that support VXLAN.

MPLS‑based VPN solutions require tight coupling between edge and core devices, meaning every node in a data‑center network must support MPLS.

There are fewer network engineers with deep MPLS expertise compared to those familiar with VXLAN.

Hardware Advances Enabling VXLAN

Modern data‑center switches (e.g., Broadcom Trident 3 and Trident 4) integrate hardware‑based VTEP that can perform line‑rate VXLAN encapsulation and provide expanded routing tables for scalable underlay networks and multi‑tenant overlays. Their powerful CPUs also support advanced control planes such as BGP EVPN or SDN‑based approaches.

VXLAN Overlay for Metro and WAN

Overlay networks like VXLAN are widely used in data‑center networking and enterprise SD‑WAN. Overlays are loosely coupled to the underlay, which can be any network technology that offers sufficient capacity and resilience. When applied to metro and WAN scenarios, VXLAN inherits the cost‑effectiveness and flexibility of SD‑WAN, enabling Ethernet‑line, Ethernet‑LAN, or L3VPN services without the high cost of MPLS routers.

Overlay Control‑Plane Options

VXLAN does not prescribe a control plane, so several options exist:

BGP EVPN : A protocol‑based method requiring configuration on each edge node; it offers robust features but adds operational complexity.

SDN Controller : Centralized programming of the data plane eliminates much of BGP EVPN’s complexity, yet scaling a single controller for metro/WAN deployments can be challenging.

Distributed (Decentralized) SDN : Replicates controller functionality across the network, removing a single point of failure and scaling issues while retaining simplified service configuration.

Deployment Advantages

Because VXLAN decouples overlay services from the underlay, it enables deployment models unavailable to MPLS, such as adding virtual services on top of an existing IP network without replacing the underlying infrastructure. This flexibility allows service providers to introduce new Ethernet and VPN offerings with minimal disruption and lower capital expenditure.

Traditional second‑layer networks built with early‑generation Ethernet switches could not meet the scalability and resilience demands of large service providers.

Most large service providers migrated to MPLS, but the high cost of MPLS routers persisted for decades.

VXLAN overlay combined with modern data‑center switches eliminates many drawbacks of pure Layer‑2 networks while avoiding expensive MPLS hardware.

*Content originally sourced from SDNLAB.