Layer 2 vs layer 3 network services, which is right for my business?


Layer 2 vs layer 3 network services, which is right for my business?

When reselling network services or bundling them into your existing service offerings, organisations are often faced with deciding between a layer 2 or layer 3 network service.

How do you make a decision based on what is right for your business?

What is layer 2 and layer 3 network?

Layer 2 network is when a company buys network services and takes responsibility for putting them together to create products for their customer base.

It’s the equivalent of buying eggs, sugar and flour to bake your own cake rather than buying a pre-cooked cake. You also need scale to commercially justify creating a layer 2 service, requiring many services to cover the minimum commitments associated with buying the “raw” ingredients or one service.

Here are some things to consider in creating a solution to sell from a layer 2 network service:

  • Network routing equipment, and ongoing management and upkeep
  • Data centre arrangements to house the equipment
  • NBN AGVC – buying a certain amount of connectivity back to the nbn POIs
  • Backhaul – getting AGVC back to your data centres
  • CVC – Managing the average bandwidth consumed by network services and managing over or under usage
  • Peering and IP transit, connecting your nbn users to the outside world

On top of networking, you also need to create, configure and manage systems or servers to provide authentication on who can and can’t log in to use your services. As well as track usage and manage records of usage for compliance.

Once established, these components will require management and scaling over time to allow for changes that often happen within a customer base. That is, as the customer base grows or contracts.

Layer 3 network is when a company won't have to handle any of the tasks necessary for a layer 2 network solution. Instead, the business can focus on delivering the service directly, and a wholesaler partner takes care of all the backend aspects for the company and their customers as part of the service package.

The main advantages of a layer 3 network are:

  • Enhanced scalability and flexibility: Sell layer 3 services without any networking infrastructure means you can grow without having to worry about managing any networking infrastructure and costs associated with it.
  • Network infrastructure scalability: Flexibility to accommodate expanding operations and the ability to easily add new devices, subnets, or even entire branch offices without disrupting the network's overall performance.
  • Improved network performance: Layer 3 networks utilise advanced routing protocols, such as Open Shortest Path First (OSPF) and Border Gateway Protocol (BGP), to optimise data transmission. These protocols enable intelligent routing decisions, ensuring that data takes the most efficient path to reach its destination. By minimising latency and packet loss, layer 3 networks provide faster and more reliable connections, resulting in improved application performance and enhanced user experiences.
  • Enhanced security and traffic control: With cyber threats constantly evolving, businesses need robust security measures to safeguard their sensitive data. Layer 3 networks offer advanced security features, including network segmentation and virtual private networks (VPNs). This allows businesses to isolate critical data and control access to network resources, significantly reducing the risk of unauthorised access and data breaches.
  • Seamless integration of cloud services: Layer 3 networks seamlessly integrate with cloud service providers, enabling businesses to access and utilise cloud-based applications and services securely.

Which one is better for your business, layer 2 or layer 3 networks?

Overview of layer 2 versus layer 3 network

Layer 2 network is better if within your business:

  • You already have the staff resources to build and maintain your network over time
  • You already have the systems and platforms to manage a network, peering, end-user authentication and record-keeping for support and billing activities
  • You want to control the internal operations and optimisations of your network

Layer 3 network is better if within your business:

  • You want to focus on your customer sales and support journey
  • You don’t have, or want, to build the tools required to manage a network

The table below outlines the main functions a business must operate when offering layer 2 or layer 3 network services and key differences:


Layer 2 network 

Layer 3 network 

nbn TC4 provisioning  

Order using portal or API 

Order using portal or API 

AGVC management 

Your business and teas to manage 

Managed by wholesale partner (ie Superloop layer 3 solution) 


Your business and teams to manage 

Managed by wholesale partner (ie Superloop layer 3 solution) 

Usage record management 

Your business and teams to manage 

Managed by wholesale partner (ie Superloop layer 3 solution) 

Network peering management 

Your business and teams to manage 

Managed by wholesale partner (ie Superloop layer 3 solution) 

How Superloop does layer 3 network services differently

In the past, selecting a layer 3 network solution involved giving up some control and visibility over the product and its service delivery in exchange for avoiding the complexities of constructing and managing your own network.

Superloop has created a layer 3 network service that includes most of the elements of control of a layer 2 network service without the burden of additional management.

The benefits to a business are:

  1. Simplified network management: Superloop’s Layer 3 wholesale network solutions provide businesses with a centralised management portal, allowing IT teams to monitor and control the network efficiently. With total visibility into the network, executives can optimise network performance, troubleshoot issues, and proactively address potential bottlenecks.
  2. Cost efficiency: Organisations can avoid the significant capital expenses associated with building and maintaining their own network infrastructure. Instead, they can leverage the expertise and economies of scale provided by Superloop’s Wholesale team, ensuring cost efficiency without compromising on network quality.
  3. Reliable support and Service Level Agreements (SLAs): Superloop offers robust support and SLAs to ensure uninterrupted network connectivity and minimise downtime. This means that organisations rely on the expertise of our wholesale teams to handle network maintenance, upgrades, and troubleshooting.

About Superloop’s Layer 3 network solution

Superloop’s Layer 3 network solution is delivered through a high-quality, high-speed network and a state-of-the-art portal.

Our portal’s unique features include:

  • Easy ordering process with real-time updates from the nbn, and the ability to deliver excellent customer experience
  • Track the customer life cycle and manage any provisioning activities such as upgrades, downgrades, service restrictions or cancellations
  • Ability to manage any service assurance functions with tools such as diagnostics, service health checks or case management functions

And with Superloop’s modern network, all interactions happen in real time. New services are provisioned and activated in minutes, and changes to existing services are processed when you need them.

The fully integrated solution with all business functions provides a 360-degree view of the entire customer base with powerful reporting capabilities and plenty of default reporting templates to perform any finance or reconciliation functions.

It’s a hassle-free solution that empowers service providers with the ability to scale up or down, not worrying about network management, geographical location infrastructure challenges, redundancy management or any people skills managing and maintaining internal networks.

On the rare occasions when you can’t do something through the portal, our support team and dedicated account managers back you up with great customer service.

Learn more about Superloop Wholesale.

Contact our Wholesale team.