# Inter-AS Option B Overview

The second method is known as inter-AS option B or 2547bis option B, after IETF RFC 4364—BGP/MPLS IP Virtual Private Networks (VPNs) (February 2006). This method uses BGP to signal VPN labels between the AS boundary routers (Figure 79). The base MPLS tunnels are local to each AS. Stacked tunnels run from end to end between PE routers on the different ASs. This method provides greater scalability, because only the BGP RIBs store all the inter-AS VPN routes.

Figure 79: Inter-AS Topology with End-to-End Stacked MPLS Tunnels

PE 1 assigns labels for routes to the customer sites, and distributes both the label assignments and the VPN-IPv4 routes throughout AS 42 in extended BGP update messages by means of internal MP-BGP. ASBR 2 then distributes the routes to ASBR 3 with external MP-BGP; ASBR 2 specifies itself as the next-hop address and assigns a new label to the route so that ASBR 3 can properly direct traffic. ASBR 3 propagates the routes by internal MP-BGP throughout AS 35, including to PE 4.