Another option for reducing fragmentation in an L2TP VPDN network requires that Maximum Receive Unit (MRU) negotiation is supported by the PPP client. One known client which supports MRU negotiations is the Windows XP PPP client. Unfortunately, other commonly deployed PPP clients do not adhere to the advertised PPP MRU as they should. To determine if your PPP client properly responds to the advertised PPP MRU, see the PPP client documentation.
PPP MRU allows a peer to advertise its maximum receive unit, which is derived from the MTU configuration on the virtual template interface. A device will not process a PPP frame with a payload larger than its advertised MRU. The Cisco PPP implementation uses the MTU of the interface as the advertised MRU value during PPP negotiations.
The MTU of a virtual template interface can be manually lowered to compensate for the size of the L2TP header. If the PPP peer listens to the MRU advertised during PPP negotiation, it will adjust its MTU (and indirectly its IP MTU) for that PPP link. This in turn will modify the TCP MSS that the peer advertises when opening up TCP connections.
Because the default MTU for an interface is 1500 bytes, the default MRU is 1500 bytes. Setting the MTU of an interface to 1460 changes the advertised MRU to 1460. This configuration would tell the peer to allow room for a 40-byte L2TP header.
One issue with lowering the MTU on the virtual-template interface is that the IP MTU is automatically lowered as well. It is not possible to configure an IP MTU greater than the MTU on a virtual template interface. This can be an issue if there is a mixture of peer devices that do and do not adjust their MTU based on the advertised MRU. The clients that are unable to listen to MRU advertisements and adjust accordingly will continue to send full-sized packets to the peer. Packets that are larger than the lowered IP MTU, yet smaller than the normal default IP MTU, will be forced to fragment. For example, an L2TP packet that is 1490 bytes would normally be transmitted without fragmentation. If the MTU has been lowered to 1460 bytes, this packet will be unnecessarily fragmented. In this situation, it would be optimal to advertise a lower MRU to those clients that are capable of listening and adjusting, yet still allow full-sized packets for those clients that are unable to adjust.
Clients that ignore the advertised MRU might experience the PMTUD problems described in the MTU Tuning Using IP MTU Adjustments. PMTUD can be turned off by clearing the DF bit on the inner IP packet.