It stands for Multiprotocol Label Switching. MPLS adds a label to each data packet to improve network efficiency and can enable you to prioritise the data that is sent and send it along pre-defined routes according to defined QOS (Quality of Service). It means thats in a converged data/voice network you can prioritise VOIP packets ahead of less important data ones.
More specifically, what is different about MPLS is that it allows those packets to actually take different paths depending on their priority, if necessary.
There are various flavors of MPLS networks available. At my last job, we replaced a frame relay network with an MPLS-based network that dramatically improved our network performance. From a logical perspective, it made it appears as if all of our sites were one routed hop away. This was a huge advantage for real-time traffic because it didn't have to traverse multiple hops to get from source to destination as it had with our frame relay network.
As the name implies, MPLS is NOT protocol specific. You can intermix different types of traffic (Frame, ATM, IP) all on the same network. MPLS takes whatever traffic type you have, places a "wrapper" around the packet, and then only uses the label to make decisions on where that packet should go. Since it is in essence a Layer 2 communication platform, it operates faster than routing, since it is connecting to a MPLS switch.
Just to update.. While MPLS is advertised as being switched faster, anymore this is not true. All major network devices now are hardware based and offer line rate routing of IP at the same performance of MPLS.
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