Layer 2 Tunneling Protocol

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What Does Layer 2 Tunneling Protocol Mean?

Layer 2 Tunneling Protocol (L2TP) is a computer networking protocol used by Internet service providers (ISPs) to enable virtual private network (VPN) operations. L2TP is similar to the Data Link Layer Protocol in the OSI reference model, but it is actually a session layer protocol.


A User Datagram Protocol (UDP) port is used for L2TP communication. Because it does not provide any security for data such as encryption and confidentiality, an encryption protocol such as Internet Protocol security (IPsec) is often used with L2TP.

This term is also known as Virtual Dialup Protocol.

Techopedia Explains Layer 2 Tunneling Protocol

Officially published in 1999, L2TP is an extension of Point-to-Point Tunneling Protocol (PPTP). It is the merger of two protocols, one from Microsoft (PPTP) and one from Cisco. L2TP saves the dial-up cost and overhead for any user willing to remotely connect with a site office. L2TP is known as Virtual Dialup Protocol because of its service of the Point-to-Point Protocol (PPP) extension over Internet.

For example, suppose that a user in New York is connected with a traditional dial-up modem and is looking to communicate with someone in Sydney. For this purpose, the user gets a connection and establishes a dedicated link from New York to Sydney. This dedicated dial-up link will use a public switched telephone network (PSTN) and provide the lowest data transfer speed because of shared PSTN media. Thousands of other users are using the same medium, so the user will have an overall speed of 33 Kbps or worse.

Instead, the user could use L2TP where PPP is used and configured at both ends (the ISP and the user site). Following the successful authentication of a user request, a tunnel is created for user data. When the tunnel is created, the user is open to start communication.

Advantages of L2TP include:

  • High data security is provided for critical applications.
  • High-level encryption is used so that critical information is always safe and remains personal.
  • It provides excellent and efficient connectivity.
  • It is cost-effective and does not have overhead cost after implementation.
  • It is reliable, scalable, fast and flexible.
  • It is an industry-standard best for the corporate sector.
  • It has the best authorization policy for users with VPN authentication.

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Margaret Rouse
Technology Expert
Margaret Rouse
Technology Expert

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.