Traditionally Layer 3 MPLSVPN service requires two labels; VPNv4 Label and LDP (Transport Label). LDP is used to distribute the transport labels within service provider domain. But let’s see how Layer 3 MPLSVPN service will work in case of Segment Routing.

Below is the topology which has configured IGP and MP-iBGP for Service Provider network. CE1 and CE2 are two sites of same customer which are part of same vrf. This service provider core is free from LDP.

Segment Routing is used for transport label however MP-iBGP is used for VPNv4 labels. On every SR capable router, Loopback interface is configured as Node segment ID which is also called as Prefix segment ID.