PPPoE vs IPoE: What are the Differences?

PPPoE vs IPoE are two different protocols used for internet connections. PPPoE is a traditional protocol, while IPoE is considered modern. We will understand the differences between both of these in simple terms, as well as go into technical details to understand the exact reasons.

So, even if you have no idea about these two, you will find this guide interesting, and network engineers can also learn a lot from this.

Let’s start with the basic, simple overview of PPPoE vs IPoE.

What is PPPoE?

PPPoE stands for Point-to-Point Protocol over Ethernet. It’s an old method of connecting to the internet.

It was first developed for dial-up connections in the early days. However, the protocol has been adapted for the broadband and DSL services too.

With PPPoE, you get a session-based connection. So, you will need a username and password whenever you wish to use the internet.

You can get these details from your ISP. After logging in, you are connected to the internet.

This method is commonly used when the ISP wants more control over user access.

When the connections were limited, this was used to manage billing, track usage, and also helped the ISP to maintain a log of user sessions.

What is IPoE?

It’s not feasible to enter the username and password every time you want to use the internet. So, a new protocol comes into the picture. It’s called IPoE. IPoE means IP over Ethernet.

Here, you don’t need a username or password to connect. Instead of using the credentials, it connects using DHCP (Dynamic Host Configuration Protocol). This protocol automatically assigns an IP address to you when you connect to the internet.

So, you can connect to the internet more easily. It’s mostly used in the fiber and cable connections. Services like IPTV or streaming need IPoE.

Now that you know the basics, let’s get technical and understand the difference between PPPoE and IPoE.

PPPoE vs IPoE: What are the Differences?

Once you understand what PPPoE and IPoE are, we will get a little technical and see the working of each. This will help you understand the major differences between these two.

Let’s see a technical comparison of PPPoE vs IPoE.

1. Connection Establishment and Authentication

Let’s begin with how each protocol establishes a connection.

• PPPoE uses a point-to-point session model. So, your router or modem sends a PPPoE discovery packet to the ISP. As the request is received, ISP authenticates the credentials, and a handshake is performed. For security purposes, the router uses PAP (Password Authentication Protocol) and CHAP (Challenge-Handshake Authentication Protocol).
• IPoE doesn’t need this. Instead, it directly obtains an IP address. If the connection is DHCP, you get IPv4, and if it’s SLAAC/DHCPv6, you will get the IPv6 IP address. The connection is fast as compared to the previous one. IPv6 is faster as compared to IPv4.

2. Protocol Stack and Layer Use

A network connection is handled using layers. There are 7 layers, each layers hold its role.

• PPPoE will use Layer 2.5. It’s a combination of layer 2, which is data link, and layer 3, which is network. So, PPP frames are encapsulated inside the Ethernet frames.
• IPoE is purely based on Layer 3. It uses native IP packets over Ethernet. As there is no encapsulation, it’s kind of faster, and no tunneling is required.

PPPoE headers take up an extra 8 bytes, reducing the available MTU from 1500 bytes (Ethernet standard) to 1492 bytes. This reduction can cause fragmentation or require manual tuning in some networks.

3. Performance and Bandwidth Overhead

It’s no secret that modern connections are a lot faster than dial-up connections. So, you should prefer IPoE over PPPoE.

PPPoE:

• Adds additional protocol headers (PPP and PPPoE).
• Reduces MTU to 1492 bytes by default.
• Slightly increases CPU load due to session management and packet encapsulation.
• May need manual tweaks to avoid packet fragmentation, especially in high-throughput environments.

IPoE:

• Has lower overhead and uses full MTU (1500 bytes).
• More suitable for modern fiber-optic and high-bandwidth services.
• Can handle gigabit-class connections with fewer CPU cycles on the CPE (Customer Premises Equipment).

4. Multicast and IPTV Support

This is a major difference for ISPs offering video streaming and IPTV. PPoE will individually send the streaming to each user. On the other hand, IPoE can send a stream to multiple users at once. Now, let’s understand this in technical terms.

• PPPoE does not natively support multicast forwarding. So, if you want to use multicast, the protocol duplicates each packet, and then they are sent..It requires more bandwidth and tunneling.
• IPoE supports multicast natively at Layer 3. So, it uses IGMP (Internet Group Management Protocol) and PIM (Protocol Independent Multicast) to deliver one multicast stream to many users.

5. Scalability and Network Management

PPPoE is tightly coupled with per-user session management. This gives ISPs more control over each user (for billing, session tracking, and authentication). So, it’s pretty obvious that it becomes harder to scale. As subscriber numbers grow, session tables and session-based QoS (Quality of Service) become a lot harder.

IPoE is more scalable. It allows for centralized IP address management, subnet-based configurations, and stateless connectivity. Since there are no sessions to maintain, routers can manage a larger number of subscribers more efficiently.

ISPs can integrate AAA (Authentication, Authorization, Accounting) via technologies like DHCP Option 82 or RADIUS accounting, even without PPPoE.

6. Security and User Isolation

Security is an area where PPPoE has traditionally held an edge in PPPoE vs IPoE.

• PPPoE allows per-user authentication via PAP/CHAP. It’s very helpful in terms of billing, as only paid users are allowed.
• Sessions can be individually tracked, throttled, or cut off.
• However, PPPoE lacks built-in encryption, so other layers (like SSL/TLS or IPsec) must be used for data security.
• IPoE, lacking session control, depends on external tools for user isolation, like VLAN tagging, MAC address filtering, or port-based isolation on the switch. These need proper configuration to ensure security, but are standard practices in modern IP networks.

Technical Summary Table (PPPoE vs IPoE)

Feature	PPPoE	IPoE
Layer	Layer 2.5 (PPP over Ethernet)	Layer 3 (IP over Ethernet)
Authentication	PAP, CHAP (built-in)	External (e.g., DHCP Option 82, MAC)
MTU Size	1492 bytes (due to overhead)	1500 bytes (standard Ethernet)
Protocol Overhead	Higher (encapsulation, session mgmt)	Lower (no session or tunneling)
Session Requirement	Yes	No
Scalability	Lower (per-user sessions)	Higher (stateless, centralized IP management)
Multicast Support	Poor (requires workarounds)	Native support (IGMP, PIM)
Ideal Use Case	DSL, legacy broadband	Fiber, cable, IPTV, high-speed broadband
Configuration Simplicity	Moderate (manual setup)	High (plug-and-play, zero-touch)
QoS and Bandwidth Control	Per-session	Per-interface or VLAN

Final Words

To conclude, that’s everything you need to know about PPPoE vs IPoE. Unless you are using an older connection such as dial-up, you should go with IPv4 (that’s the default one). Some older connections may require PPPoE.

Read More:

• PPPoE vs DHCP: What are the Differences, How to choose?
• PoE vs PoE+ vs PoE++ vs UPoE vs UPoE+: What is the difference?