ATM-based and FR-based VPNs have gained widespread applications, which can
enable different VPNs to share the network infrastructure of the same service
provider. Yet, such traditional VPNs are not perfect due to some drawbacks, for
example,

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Dependency on dedicated medium like ATM and FR. To provide the ATM-based
VPN service, a service provider must construct a nationwide ATM network. If
this service provider wants to develop the FR-based service, he has to construct
a separate nationwide FR network. This is absolutely an enormous waste in
terms of network construction.

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The VPN deployment is rather complex. This becomes more evident when
adding a site onto the existing VPN, in which case, the configurations of all the
edge nodes accessing this VPN site must be modified.

Some substitution solutions emerged in the process of solving these inherent
drawbacks of traditional VPN. MPLS L2VPN is one among them. As the name
implies, MPLS L2VPN provides L2 VPN service based on MPLS networks. With this
solution, the service provider can provide the L2VPN service based on different
media, such as ATM, FR, VLAN, Ethernet, and PPP, on the same MPLS network.
Still, this MPLS network can provide other common services like IP, L3 VPN, and
QoS. This approach thus enormously saves the investment on network
infrastructure.

Simply put, MPLS L2VPN transparently transmits L2 user data over MPLS networks.
From the perspective of a user, this MPLS network is a L2 switching network,
through which, L2 connection can be set up between sites. Take ATM as an
example. You can connect a CE to another remote CE by configuring an ATM VC
across an MPLS network. The interconnection thus achieved is exactly the same as
the interconnection implemented using an ATM network.