An enterprise has a large number of retail locations that are currently serviced by a hub-and- spoke Frame Relay network using OSPF as the routing protocol. The enterprise is planning to deploy a…

Pseudowires based on L2TPv3 provide point-to-point Layer 2 circuits, not scalable any-to-any Layer 3 connectivity suitable for a large retail deployment.

Multipoint GRE tunnels require a full mesh to achieve any-to-any connectivity, resulting in O(n-squared) tunnel scaling and high management overhead as the number of locations grows.

A full mesh of IPsec tunnels has the same O(n-squared) scaling limitation as GRE and adds encryption processing overhead, making it unsuitable for a high-bandwidth, large-scale retail deployment.

L3VPNs using RFC 2547 allow any-to-any connectivity by routing VPN traffic through a shared MPLS backbone, where PE routers exchange customer VPN routes via MP-BGP and forward traffic using MPLS label switching. This architecture scales linearly because adding a new retail site requires only a single PE connection rather than tunnels to every other site, while MPLS label switching maximizes bandwidth utilization compared to overlay encapsulation.