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We currently have two sites connected via a vpn over a 4mb leased line.

Site 1:  172.16.0.0/24
Site 2:  192.16.0.3/24

Thankfully the contract is about to end, so we are looking at upgrading to a 100mbps short haul / ethernet extension - the equivalent of connecting the two networks directly via cat5.

I had assumed that because we have layer 2 access and rj45 plugs at each site we could bridge the connections quite easily, however our cisco provider recommends a switch at each end performing layer 3 routing - because of the 100mbps speed we need good performance to the tune of approx 3k each.

Any help would be appreciated.

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I was in a similar situation a couple years ago. A routed connection would be the better route to go, especially considering that you already have two defined subnets. Why allow any more across that line then is explicitly needed?

For the scale of your network a couple of basic 2900 series routers would be sufficient - $1,200 each.

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