Refer to the exhibit. Service Provider A and Service Provider B have agreed to a strategic interconnect relationship that will allow them access into each other's geographies by using an inter-AS eBGP

In Option C, route reflectors in each AS establish a direct multihop eBGP VPNv4 peering session to distribute customer VPN routes across the AS boundary, eliminating the need for ASBRs to maintain VPNv4 routing tables. This design scales well because only the RRs require VPNv4 capability and the session is multihop since the RRs are not directly adjacent to each other.

ASBRs acting as inline route reflectors that set themselves as next-hop describes Option B behavior, where ASBRs re-advertise VPNv4 routes - in Option C the ASBRs only exchange labeled IPv4 routes and do not handle VPNv4.

ASBRs exchange labeled IPv4 routes using eBGP IPv4 labeled unicast (RFC 3107) to stitch the LSP across the inter-AS link, enabling end-to-end label-switched forwarding for VPN packets without exposing VPNv4 at the ASBR level. The labels negotiated via this eBGP IPv4 session allow each ASBR to perform a label swap at the AS boundary, completing the end-to-end LSP required for VPN traffic.

ASBRs in Option C use eBGP IPv4 labeled unicast (not VPNv4) to build the inter-AS LSP - VPNv4 routing information is carried only between the RRs, not at the ASBR level.

RRs must exchange VPNv4 (not plain IPv4) to carry customer route distinguishers, VPN labels, and extended communities - plain IPv4 eBGP between RRs would strip the VPN attributes needed for customer prefix separation.