# Carrier-of-Carriers IPv4 VPNs Overview

A carrier-of-carriers VPN is a two-tiered relationship between a provider carrier and a customer carrier. In a carrier-of-carriers VPN, the provider carrier provides a VPN backbone network for the customer carrier (Tier 1). The customer carrier, in turn, provides layer 3 VPN or Internet services to its end customers (Tier 2).

This section provides the background you need to understand carrier-of-carriers VPNs in general, but deals with IPv4 VPNs. For information about carrier-of-carriers IPv6 VPNs, see Carrier-of-Carriers IPv6 VPNs Overview .

The carrier-of-carriers VPN enables the customer carrier to provide the following services for its end customers:

- Traditional IP services—The customer carrier provides Internet connections for its customers and uses the provider carrier’s VPN to connect its dispersed networks.
- Layer 3 VPN services—The customer carrier provides VPN services for its customers and uses the provider carrier’s VPN for the backbone that connects the customer carrier’s VPN sites. This environment is called a hierarchical VPN, because there are multiple tiers of VPNs—the tier-1 backbone VPN of the provider carrier and the tier-2 VPNs of the customer carrier.

In a hierarchical carrier-of-carriers VPN environment, each carrier (or ISP) maintains the internal routes of its customers in VRF tables on its PE routers. Therefore, the customer carrier’s internal routes are installed into the VRF routing tables of the provider carrier’s PE routers and advertised across the provider carrier’s core. Similarly, the internal routes of the customer carrier’s customers are installed into the VRF routing tables of the customer carrier’s PE routers. The customer carrier’s external routing information is exchanged by its PE routers (which connect to the provider carrier’s VPN) over their own IBGP session.

| Note: To the customer carrier, the router it uses to connect to the provider carrier’s VPN is a PE router. However, the provider carrier views this device as a CE router.

Carrier-of-carriers VPNs provide the following benefits to the customer carriers:

- Reduced VPN administration—The VPN backbone is managed by the provider carrier.
- Reduced routing management—Intersite routing issues are the responsibility of the provider carrier.
- Flexibility—The VPN backbone can be used to deliver both VPN services and Internet connectivity services.

The following benefits are provided to the provider carriers:

- Reduced VPN administration—Provider carriers do not have to maintain separate VPNs for each customer carrier’s end customer.
- Reduced router management—Customer carriers manage their own CE routers.
- Scalability—The provider carrier’s PE routers do not maintain the end customer’s external routes (as required in a traditional networking environment); the carrier-of-carriers network easily scales as the number of external routes and VPNs increases.

The following sections describe the two types of carrier-of-carriers environments.