History
In 1996 a group from Ipsilon Networks proposed a "flow management protocol". Their "IP Switching" technology, which was defined only to work over ATM, did not achieve market dominance. Cisco Systems introduced a related proposal, not restricted to ATM transmission, called "Tag Switching". It was a Cisco proprietary proposal, and was renamed "Label Switching". It was handed over to the Internet Engineering Task Force (IETF) for open standardization. The IETF work involved proposals from other vendors, and development of a consensus protocol that combined features from several vendors' work.
One original motivation was to allow the creation of simple high-speed switches, since for a significant length of time it was impossible to forward IP packets entirely in hardware. However, advances in VLSI have made such devices possible. Therefore the advantages of MPLS primarily revolve around the ability to support multiple service models and perform traffic management. MPLS also offers a robust recovery framework that goes beyond the simple protection rings of synchronous optical networking (SONET/SDH).
Read more about this topic: Multiprotocol Label Switching
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