The lowest granularity at which MLPPPoX can be enabled is an L2TP tunnel. An MLPPPoX enabled tunnel is not limited to carrying only MLPPPoX sessions but can carry normal PPP(oE) sessions as well.
In addition to enabling MLPPPoX on the session terminating node LNS, MLPPPoX can also be enabled on the LAC by a PPP policy. The purpose of enabling MLPPPoX on the LAC is to negotiate MLPPPoX LCP parameters with the client. After the LAC receives the MRRU option from the client in the initial LCP ConfReq, it changes its tunnel selection algorithm so that all sessions of an MLPPPoX bundle are mapped into the same tunnel.
The LAC negotiates MLPPPoX LCP parameters regardless of the transport technology connected to it (ATM or Ethernet). LCP negotiated parameters are passed by the LAC to the LNS by Proxy LCP in a ICCN message. This way, the LNS has an option to accept the LCP parameters negotiated by the LAC or to reject them and restart the negotiation directly with the client.
The LAC transparently passes session traffic handed to it by the LNS in the downstream direction and the MLPPPoX client in the upstream direction. The LNS and the MLPPPoX client performs all data processing functions related to MLPPPoX such as fragmentation and interleaving.
After the LCP negotiation is completed and the LCP transition into an open state (configuration ACKs are sent and received), the Authentication phase on the LAC begins. During the Authentication phase the L2TP parameters become known (l2tp group, tunnel, and so on), the session is extended by the LAC to the LNS by L2TP. If the Authentication phase does not return L2TP parameters, the session is terminated because the 7750 SR does not support directly terminated MLPPPoX sessions.
In the case that MLPPPoX is not enabled on the LAC, the LAC negotiates plain PPP session with the client. If the client accepts plain PPP instead of MLPPPoX as offered by the LAC, when the session is extended to the LNS, the LNS re-negotiates MLPPPoX LCP with the client on a MLPPPoX enabled tunnel. The LNS learns about the MLPPPoX capability of the client by a Proxy LCP message in ICCN (first Conf Req received from the client is also send in a Proxy LCP). If the there is no indication of the MLPPPoX capability of the client, the LNS establishes a plain PPP(oE) session with the client.