When does cloud federation require Layer 2 connectivity?
The context of this question matters. If we are talking about providing services for an enterprise hybrid cloud environment, then it becomes easier to answer.
When you offer services to an organization, you can give them access to Layer 3 (IP) of the TCP/IP stack or you can offer them access to Layer 2 (Data-Link) of the TCP/IP stack. The lower you go on the TCP/IP stack -- in this case, Layer 2 -- the easier it is to extend the multi-tenant setup you have in your own data center into the federated cloud provider.
It also becomes easier for enterprises to transparently extend the cloud provider's federated infrastructure into its own data centers when they have full access to the lower levels of the TCP/IP stack. This transparency and simplicity makes orchestration and operations significantly easier for both the provider and customer.
If we are not talking about a hybrid cloud scenario, however, the Layer 2 connectivity requirement could be relaxed somewhat. Why not then just keep it totally simple and provide Layer 2 connectivity? After all, cloud services are all about simplicity.
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