On a Kompella VLL network, L2VPN instances are configured on PE devices, with each L2VPN instance representing a private Kompella VLL network. In an L2VPN instance, the PE device creates one CE entity for each CE device connected to it and assigns a CE ID to each CE entity. The CE ID is unique within the L2VPN instance. Any two CE devices in this L2VPN instance can set up P2P VLL connections to communicate at Layer 2.