What Is MPLS? MPLS Explained and Compared with SD-WAN

MPLS stands for Multiprotocol Label Switching. It is a packet-forwarding technique used inside carrier and large enterprise networks that steers traffic with short, fixed-length labels instead of looking up the destination IP address at every router. Because MPLS operates between the data link layer (Layer 2) and the network layer (Layer 3), it is often described as a “Layer 2.5” protocol.

For most businesses, “MPLS” means a private WAN service bought from a telecom carrier: each branch office gets an MPLS circuit into the carrier’s network, and traffic between sites travels over pre-engineered paths with predictable latency and service-level guarantees.

How MPLS works

When a packet enters the carrier network, the ingress label edge router classifies it into a forwarding equivalence class (FEC), for example by destination, customer VPN, or traffic class, and attaches a label.
Label switching routers along the way forward the packet by reading only the label, swapping it for the next hop’s label along a pre-established label-switched path (LSP).
The egress router removes the label and delivers the original packet to the destination site.

Because paths are set up in advance, carriers can reserve capacity, prioritize voice and video with quality-of-service classes, and keep each customer’s traffic separate in its own MPLS VPN.

Traditional Use of MPLS Circuits

Historically, MPLS circuits have been used to connect branch offices to each other to facilitate communication between the branches. For IP traffic destined to/from the public Internet, the branch office was required to connect to the service provider core via layer 2, as MPLS does not have layer 3 routing ability. Once the packets are received at the service provider core, the MPLS labels are stripped, and packets are dropped into the layer 3 network to be routed to the public Internet.

SHORTCOMINGS OF MPLS

Inability to Route Internet Traffic Locally

Since MPLS transport doesn’t have layer 3 routing capabilities, packets in and out of branch offices need to go through the MPLS gateway at the service provider core. This means any type of traffic, including web surfing or traffic destined for public clouds, will go through the expensive MPLS circuits just to connect to the Internet.

High Cost of MPLS

MPLS transport is expensive, especially when compared to widely available broadband Internet access lines such as DSL, cable, and fiber. The per-bit cost of MPLS can unnecessarily consume a significant portion of the IT budget. To overcome MPLS bandwidth bottlenecks, IT managers are usually presented with expensive MPLS upgrade options that are not practical.

Single Point of Failure

Although MPLS is often advertised by carriers as having higher uptime, it can still go down when the carrier experiences a technical problem. Since MPLS is primarily based on a single service provider and single transport, it can be crippled by a single point of failure.

Limited Bandwidth and Long Lead Times

MPLS upgrades for higher bandwidth may not be possible in some cases or are otherwise cost-prohibitive. The lead times for MPLS installation and upgrades can be impractically long, hindering an organization’s ability to scale and adapt to changing network requirements.

SD-WAN Versus MPLS: A Comparison of Key Benefits

Agile Traffic Management for Optimized Bandwidth Utilization

Mushroom Networks’ SD-WAN enables easy QoS and traffic management, allowing Internet traffic to be routed locally without consuming the point-to-point tunnel from branch offices to the data center or between branch offices. This significantly reduces the traffic that needs to go through the tunnels between branches, effectively relieving congestion and optimizing bandwidth utilization.

Increased Reliability with High Uptime

With the availability of various carriers and service providers for connectivity, including MPLS, DSL, cable, fiber, 4G LTE, 5G wireless, or satellite communications, office connectivity is no longer tied to a single point of failure. Mushroom Networks’ SD-WAN tunnels ensure that even ongoing sessions are kept alive during transport blackouts and brownouts, providing increased reliability and high uptime.

Cost-Effective MPLS Augmentation

Cost-effective broadband Internet lines can be brought together with Mushroom Networks’ SD-WAN, resulting in an overlay IP connectivity with improved QoS and SLAs. This multi-WAN architecture enables a highly effective alternative to MPLS by either augmenting or completely replacing MPLS circuits, offering significant cost savings without compromising on performance.

Rapid Deployment and Rollout

Installation and rollout of new locations can be completed within minutes by drop-shipping preconfigured units to the branch being turned up. The zero-touch installation enables hassle-free and quick location turn-ups compared to lead times that can be orders of magnitude longer with MPLS. This rapid deployment capability allows organizations to quickly expand their network footprint and adapt to changing business requirements.

WHY CHOOSE MUSHROOM'S SD-WAN?

Application-Centric Approach for Optimized Performance

Mushroom Networks’ SD-WAN technology has an application-centric approach at its core. This means flows can be identified and treated via overlay tunnels designed to optimize specific applications. Since application needs for QoS (Quality of Service) differ, from maximizing throughput to minimizing packet loss, latency, jitter, or many other factors, including the historic performance of the WAN, highly advanced SD-WAN tunnels truly make a difference in end-user experiences.

Proven Track Record and Extensive Experience

Mushroom Networks’ SD-WAN solutions have been deployed worldwide with the widest and largest portfolio of clients. Use cases include deployments in enterprise branches, service providers deploying for branch office connectivity, HD broadcasting using live video streaming, and public transportation deployments for optimized connectivity over 3G, 4G LTE, and 5G wireless. Mushroom Networks’ solutions embed technologies that have been perfected over more than a decade with unique know-how and in-the-field experience.

Automation at Every Level for Simplified Management

One of the added values of SD-WAN architectures is based on automating the configuration and management of endpoints. However, being able to automate problem mitigation by setting WAN networks on autopilot is unique to Mushroom Networks’ SD-WAN. Advanced tunnels automatically monitor network conditions and detect anomalies that will negatively affect a specific flow type, taking measures to route around those network problems in real-time without dropping ongoing sessions.

SD-WAN Design Studio for Customizable Solutions

Mushroom Networks’ SD-WAN solutions come with built-in SD-WAN tunnels already configured. However, for service providers and enterprises that would like to customize their SD-WAN overlay networks, Mushroom Networks’ SD-WAN Design Studio offers a drag-and-drop based UI to build or modify tunnels with ease. This shrinks new service development and rollout cycles by an order of magnitude, enabling organizations to quickly adapt to changing network requirements and roll out new services.

MPLS vs. SD-WAN at a glance

Attribute	MPLS	SD-WAN
Transport	Private circuits from a single carrier	Any mix of broadband, fiber, 4G LTE, 5G, satellite and existing MPLS
Cost per Mbps	High, billed per circuit and per site	Low, built on commodity Internet links
New site turn-up	Weeks to months for circuit installation	Minutes to days with zero-touch provisioning
Resilience	One circuit is a single point of failure unless a backup is ordered	Traffic fails over or is spread across multiple links automatically
Cloud and SaaS access	Often backhauled through a central data center	Direct Internet breakout at each branch
Performance control	Carrier-managed quality-of-service classes	Application-aware routing based on live link measurements

MPLS FAQ

What does MPLS stand for?

MPLS stands for Multiprotocol Label Switching. “Multiprotocol” refers to its ability to carry many kinds of traffic, including IPv4, IPv6, Ethernet and older protocols, over the same label-switched network.

Is MPLS Layer 2 or Layer 3?

Neither exactly. MPLS inserts its label between the Layer 2 frame header and the Layer 3 IP header, which is why it is commonly called a Layer 2.5 protocol. Carriers use it to deliver both Layer 3 IP VPNs and Layer 2 services such as VPLS.

What is an MPLS circuit?

An MPLS circuit is the dedicated access connection a carrier installs at a business location to connect it to the carrier’s MPLS network. Each site on a private MPLS WAN has its own circuit, usually with committed bandwidth and a service-level agreement.

What is IP MPLS?

IP MPLS (also written IP/MPLS) is a network that carries IP traffic over MPLS label-switched paths. It combines IP routing for reachability with label switching for traffic engineering, quality of service and VPN separation, and it underpins most carrier business VPN services.

Is MPLS still used?

Yes. Carriers still run their core networks on MPLS, and many enterprises keep MPLS for sensitive or latency-critical applications. What has changed is the branch WAN: many organizations now augment or replace MPLS circuits with SD-WAN over broadband and cellular links to lower cost and add redundancy.

Can SD-WAN replace MPLS?

For most branch and small-office traffic, yes. An SD-WAN that bonds two or more Internet links can deliver comparable reliability with more bandwidth at a lower cost. Organizations that need to keep MPLS can run it as one of several paths in the same SD-WAN, a hybrid design supported by Mushroom Networks’ SD-WAN appliances and Broadband Bonding service.

Last updated September 22, 2026.