PPPoE (Point-to-Point Protocol over Ethernet) is a specification for connecting multiple computer users on an Ethernet local area network to a remote site through common customer premises equipment, which is the telephone company's term for a modem and similar devices. PPPoE can be used to have an office or building-full of users share a common Digital Subscriber Line (DSL), cable modem, or wireless connection to the Internet. PPPoE combines the Point-to-Point Protocol (PPP), commonly used in dialup connections, with the Ethernet protocol, which supports multiple users in a local area network. The PPP protocol information is encapsulated within an Ethernet frame.
PPPoE has the advantage that neither the telephone company nor the Internet service provider (ISP) needs to provide any special support. Unlike dialup connections, DSL and cable modem connections are "always on." Since a number of different users are sharing the same physical connection to the remote service provider, a way is needed to keep track of which user traffic should go to and which user should be billed. PPPoE provides for each user-remote site session to learn each other's network addresses (during an initial exchange called "discovery"). Once a session is established between an individual user and the remote site (for example, an Internet service provider), the session can be monitored for billing purposes. Many apartment houses, hotels, and corporations are now providing shared Internet access over DSL lines using Ethernet and PPPoE.