History
After successful experiments with Voice over Ethernet from 1981 to 1984, Dr. W. David Sincoskie joined Bellcore and began addressing the problem of scaling up Ethernet networks. At 10 Mbit/s, Ethernet was faster than most alternatives of the time; however, Ethernet was a broadcast network and there was no good way of connecting multiple Ethernet networks together. This limited the total bandwidth of an Ethernet network to 10 Mbit/s and the maximum distance between any two nodes to a few hundred feet.
By contrast, although the existing telephone network's peak speed for individual connections was limited to 56 kbit/s (less than one hundredth of Ethernet's speed), the total bandwidth of that network was estimated at 1 Tbit/s, capable of moving over a hundred thousand times more information in a given timescale.
Although it was possible to use IP routing to connect multiple Ethernet networks together, the VAX-11/780 computers commonly used as routers cost $400,000 each at that time, and their total throughput was significantly less than Ethernet speeds. Sincoskie started looking for alternatives that required less processing per packet. In the process he independently reinvented the self-learning ethernet switch.
However, using switches to connect multiple Ethernet networks in a fault-tolerant fashion requires redundant paths through that network, which in turn requires a spanning tree configuration. This ensures that there is only one active path from any source node to any destination on the network. This causes centrally located switches to become bottlenecks, which limits scalability as more networks are interconnected.
To help alleviate this problem, Sincoskie invented VLANs by adding a tag to each Ethernet packet. These tags could be thought of as colors, say red, green, or blue. Then each switch could be assigned to handle packets of a single color, and ignore the rest. The networks could be interconnected with three different spanning trees: a red spanning tree, a green spanning tree, and a blue spanning tree. By sending a mix of different packet colors, the aggregate bandwidth could be improved. Sincoskie referred to this as a multitree bridge. He and Chase Cotton created and refined the algorithms (called the Extended Bridge Algorithms for Large Networks) necessary to make the system feasible.
This "color" is what is now known in the Ethernet frame as the 802.1Q header, or the VLAN tag. While VLANs are commonly used in modern Ethernet networks, using them for the original purpose would be rather unusual.
Read more about this topic: Virtual LAN
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