Bridging the Gap: VXLAN's Point-to-Multipoint Advantage for ISPs with MikroTik

by Dennis Burgess

Bridging the Gap: VXLAN's Point-to-Multipoint Advantage for ISPs

Internet Service Providers (ISPs) continuously strive to deliver faster, more reliable, and scalable networks to meet growing customer demands. One significant challenge is navigating the space between traditional Layer 2 bridging and advanced Layer 3 routing, commonly referred to as “Layer 2.5.” VXLAN (Virtual Extensible LAN), standardized in RFC 7348, offers an innovative solution that bridges this critical gap—particularly due to its powerful point-to-multipoint nature.

Historically, ISPs have wrestled with extending Layer 2 segments across geographically dispersed sites without facing the scalability limitations of traditional Ethernet bridging. While Layer 3 solutions such as MPLS offer robust scalability, they often come with increased complexity and cost. VXLAN strikes an optimal balance by encapsulating Layer 2 frames within Layer 3 packets—delivering the simplicity of Ethernet alongside the reachability and scalability of Layer 3 IP networks.

VXLAN inherently operates in a point-to-multipoint fashion, meaning a single VXLAN Tunnel Endpoint (VTEP) can communicate efficiently with multiple remote VTEPs without the cumbersome configuration typically required in fully meshed Layer 2 networks. This makes VXLAN exceptionally suitable for ISPs needing flexible, scalable network designs.

MikroTik has embraced VXLAN technology, integrating VXLAN support directly into RouterOS since version 7.x. MikroTik routers provide ISPs with straightforward, cost-effective options to deploy VXLAN across their networks—combining strong performance with affordability.

Several reasons make MikroTik’s implementation appealing to ISPs:

• Easy Configuration: RouterOS simplifies VXLAN deployment, making it accessible to network operators without extensive training or expensive equipment.
• Cost Efficiency: MikroTik hardware delivers VXLAN capabilities without the price tag associated with larger enterprise-grade vendors.
• Flexibility and Scalability: MikroTik’s VXLAN implementation supports network expansion with minimal complexity, leveraging RouterOS management and scripting features.

By implementing VXLAN, ISPs can achieve:

1. Scalable Layer 2 Segments: Extend broadcast domains over Layer 3 networks without traditional spanning-tree limitations.
2. Simplified Network Management: Reduce complexity by minimizing manual configurations typically required for large-scale Layer 2 designs.
3. Improved Customer Offerings: Rapidly provision segmented services (such as VLANs), improving isolation and service flexibility.

MikroTik continues to enhance VXLAN support to meet evolving ISP requirements. Several features are commonly requested and may appear in future RouterOS releases:

• Enhanced EVPN Integration: Deeper EVPN capabilities to provide a dynamic control plane alongside VXLAN.
• Improved Hardware Acceleration: Expanded offload support on additional platforms to boost throughput and reduce latency.
• Advanced Multicast Handling: Stronger multicast-over-VXLAN support for large-scale distribution (e.g., IPTV and multicast applications).

VXLAN’s strength lies in its standardized design. Adherence to RFC 7348 supports interoperability, vendor neutrality, and predictable behavior. ISPs implementing VXLAN benefit from a broad ecosystem and globally recognized standards.

VXLAN on MikroTik RouterOS provides ISPs a practical path to blend Layer 2 simplicity with Layer 3 scale. As MikroTik continues to expand its feature set and support standards-based protocols, VXLAN becomes an increasingly valuable tool for modernizing ISP infrastructure— delivering the agility, scalability, and reliability demanded in today’s competitive market.

Link Technologies, Inc. offers hardware and consulting services to help you with virtually any MikroTik or RouterOS configuration. Contact sales@linktechs.net or call 314-735-0270 to find out more information.