Layer Two Tunneling Protocol (L2TP) is an extension of the Point-to-Point Tunneling Protocol (PPTP) used by an Internet service provider (ISP) to enable the operation of a virtual private network (VPN) over the Internet. L2TP merges the best features of two other tunneling protocols: PPTP from Microsoft and L2F from Cisco Systems. The two main components that make up L2TP are the L2TP Access Concentrator (LAC), which is the device that physically terminates a call and the L2TP Network Server (LNS), which is the device that terminates and possibly authenticates the PPP stream.
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PPP defines a means of encapsulation to transmit multiprotocol packets over layer two (L2) point-to-point links. Generally, a user connects to a network access server (NAS) through ISDN, ADSL, dialup POTS or other service and runs PPP over that connection. In this configuration, the L2 and PPP session endpoints are both on the same NAS.
L2TP uses packet-switched network connections to make it possible for the endpoints to be located on different machines. The user has an L2 connection to an access concentrator, which then tunnels individual PPP frames to the NAS, so that the packets can be processed separately from the location of the circuit termination. This means that the connection can terminate at a local circuit concentrator, eliminating possible long-distance charges, among other benefits. From the user's point of view, there is no difference in the operation.