The Frame Relay packet-switching protocol operates at the physical and data link layers in a network to optimize packet transmissions by creating virtual circuits between hosts. Figure 18 shows a typical Frame Relay network.
Figure 18: Frame Relay Network

Figure 18 shows multiple paths from Host A to Host B. In a typical routed network, traffic is sent from device to device with each device making routing decisions based on its own routing table. In a packet-switched network, the paths are predefined. Devices switch a packet through the network according to predetermined next-hops established when the virtual circuit is set up.
A virtual circuit is a bidirectional path between two hosts in a network. Frame Relay virtual circuits are logical connections between two hosts that are established either by a call setup mechanism or by explicit configuration.
A virtual circuit created through a call setup mechanism is known as a switched virtual circuit (SVC). A virtual circuit created through explicit configuration is called a permanent virtual circuit (PVC).
Before data can be transmitted across an SVC, a signaling protocol like ISDN must set up a call by the exchange of setup messages across the network. When a connection is established, data is transmitted across the SVC. After data transmission, the circuit is torn down and the connection is lost. For additional traffic to pass between the same two hosts, a subsequent SVC must be established, maintained, and terminated.
Because PVCs are explicitly configured, they do not require the setup and teardown of SVCs. Data can be switched across the PVC whenever a host is ready to transmit. SVCs are useful in networks where data transmission is sporadic and a permanent circuit is not needed.
An established virtual circuit is identified by a data-link connection identifier (DLCI). The DLCI is a value from 16 through 1022. (Values 1 through 15 are reserved.) The DLCI uniquely identifies a virtual circuit locally so that routers can switch packets to the appropriate next-hop address in the circuit. Multiple paths that pass through the same transit routers have different DLCIs and associated next-hop addresses.
Frame Relay uses the following types of congestion notification to control traffic within a Frame Relay network. Both are controlled by a single bit in the Frame Relay header.
Traffic congestion is typically defined in the buffer queues on a router. When the queues reach a predefined level of saturation, traffic is determined to be congested. When traffic congestion occurs in a virtual circuit, the router experiencing congestion sets the congestion bits in the Frame Relay header to 1. As a result, transmitted traffic has the FECN bit set to 1, and return traffic on the same virtual circuit has the BECN bit set to 1.
When the FECN and BECN bits are set to 1, they provide a congestion notification to the source and destination devices. The devices can respond in either of two ways: to control traffic on the circuit by sending it through other routes, or to reduce the load on the circuit by discarding packets.
If devices discard packets as a means of congestion (flow) control, Frame Relay uses the discard eligibility (DE) bit to give preference to some packets in discard decisions. A DE value of 1 indicates that the frame is of lower importance than other frames and more likely to be dropped during congestion. Critical data (such as signaling protocol messages) without the DE bit set is less likely to be dropped.