What Is Tunneling in Networking? Definition and How It Works

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Tunneling in cloud networking is a way to securely move data from one network to another, without anyone else knowing. Think of it as a secret passageway or underground tunnel to which only you have the key, where you can send and receive data without worrying about prying eyes.

How tunneling in networking works

Network tunneling works by wrapping data in encapsulated packets that look like normal traffic on the public network. Upon arriving at their destination, the packets are decapsulated and decrypted. 

Packets typically consist of two parts:

  • Header: Contains protocol and routing information, such as the source and destination IP addresses.
  • Payload: The actual data being sent.

Tunneling ensures your data remains safe and secure while traveling through the private tunnel on a public network. Plus, you don’t have to worry about any slowdowns or disruptions caused by other users on the public network.

2 types of network tunnels

There are several types of network tunnels, each with a different purpose, but the most common are virtual private networks (VPNs) and secure shell (SSH) tunnels.

Virtual private network (VPN) tunnel

By far the most common type of a network tunnel is a VPN tunnel. VPN tunnels allow users to securely connect to remote networks over the public internet, granting them access to resources on the other side of the tunnel without worrying about security risks. VPNs also offer encryption, making it difficult for anyone outside the tunnel to intercept or read data.

Secure Shell (SSH) tunnel

SSH tunnels provide an encrypted connection between a server and a client over an unsecured network like the internet. SSH tunnels can be used for secure file transfers, remote command execution, and port forwarding, making it useful in data centers and large enterprises with a centralized IT department overseeing dispersed workforces.

Common protocols used in tunneling

There are many ways of tunneling in a network using different protocols, including PPTP, L2TP, IPsec, SSL/TLS, and more.

Point-to-Point Tunneling Protocol (PPTP)

Point-to-Point Tunneling Protocol (PPTP) is a secure way to create VPNs on TCP port 1723. PPTP leverages an IP network to build tunnels and encrypt data sent via the VPN connection, which can be established quickly. 

However, it’s unfortunately prone to weak authentication issues, presenting security risks for users.

Layer 2 Tunneling Protocol (L2TP)

Layer 2 Tunneling Protocol (L2TP) is a common tunneling protocol used by ISPs to enable VPNs as an extension of PPTP. Based on the OSI model, it operates at the session layer and transmits data between two L2 networks over an IP L3 network. 

Keep in mind that since L2TP doesn’t include encryption out of the box, it requires another encryption protocol to increase security.

Internet Protocol Security (IPsec)

Internet Protocol Security (IPsec) is a tunneling protocol used to secure data communication between two networks. It restricts access from unwanted sources and allows organizations to securely connect two networks that may operate on different protocols. 

IPsec has been widely adopted by corporations and governments alike, as it keeps information secure in transit––an important advantage when transmitting sensitive data.

Secure Sockets Layer (SSL) and Transport Layer Security (TLS)

SSL uses a cryptographic system that uses two keys to encrypt data: a public key known to everyone and a private or secret key known only to the message’s recipient. It creates an encrypted link between a web server and a browser, allowing users to transmit private data online. It is one of the most popular technologies used for secure communication on the web.

TLS is an improved version of SSL and works similarly to its progenitor.

Split tunneling

Split tunneling is a computer networking concept that allows a mobile user to access certain network resources through an encrypted VPN connection while all other traffic traverses the internet publicly without encryption via their local ISP gateway connection. This provides increased security for data traversing the public internet while still allowing full access to local resources such as printers and file shares.

IP in IP

IP in IP is a tunneling protocol that provides a secure tunnel between two remote hosts by encapsulating an IP packet within another IP packet. The tunnel creates an entry point with the Source IP address, and an exit point with the Destination IP address. 

When tunneling, the inner packet is unaltered except for the Time to Live (TTL) field, which is decremented. To ensure successful transmission, other fields such as Don’t Fragment and Type of Service are replicated on the outer packet. 

Also, if the packet size exceeds the Path Maximum Transmission Unit (MTU), it will be fragmented before tunneling to properly reassemble at its destination once decapsulated.

Generic Routing Encapsulation (GRE) tunneling

Generic Routing Encapsulation (GRE) is a tunneling protocol developed by Cisco Systems to encapsulate voice, video, and data traffic within an IP network. GRE can be used with IPv4 or IPv6 and offers several benefits over traditional VPN technologies, such as improved scalability and flexibility.

Virtual Extensible Local Area Network (VXLAN)

Virtual Extensible Local Area Network (VXLAN) is an encapsulation protocol used to build virtualized LANs on top of physical infrastructure networks. It offers several benefits over traditional VLAN technologies, including extended scalability, improved manageability, and enhanced security features.


OpenVPN is an open-source application that utilizes VPN techniques to create secure point-to-point or site-to-site connections and remote access facilities. It employs a custom security protocol with SSL/TLS for efficient key exchange, guaranteeing your data remains safe while in transit.

Generic Network Virtualization Encapsulation (Geneve)

Generic Network Virtualization Encapsulation (Geneve) is an overlay network encapsulation protocol developed by the Internet Engineering Task Force (IETF). It supports multiple encapsulation methods, including VXLAN and NVGRE. It also offers features such as per-packet load balancing, policy-based routing, and quality of service control.


WireGuard is an open-source software application that was crafted to provide a user-friendly experience, lightning-fast performance, and maximum security. This protocol has been proven to surpass the capabilities of OpenVPN and IPsec by providing a more powerful infrastructure. WireGuard uses the User Datagram Protocol (UDP).

8 benefits of tunneling

Network tunneling obviously has the advantage of providing an efficient way to transfer data securely, but it actually has a lot of other benefits as well, including minimizing latency, improving scalability and manageability, and getting data through unsupported protocols and ISP limitations. 

Here are eight benefits of using tunneling for your network.

1. Secure data

Tunneling provides extra security for your data as it travels across networks, encrypting it and ensuring it’s only accessible by authorized users. It also helps prevent unauthorized access to the network and keeps malicious actors out.

2. Create VPNs

Tunneling can be used to create a VPN, allowing multiple remote users to securely connect over a shared public or private network. This makes working remotely or collaborating with other teams much easier and more secure.

3. Minimize latency and improve speed 

Some tunneling protocols, such as GRE and IPsec, can improve latency and speed by cutting down on the amount of data that needs to be sent, thus improving the efficiency of your network.

4. Enhance scalability

Network tunneling makes it easier to scale your networks up or down depending on current needs, as tunnels can easily be added or removed without disrupting existing connections or services.

5. Improve manageability

For larger networks that need to remain organized, tunneling allows administrators to easily manage different segments of their networks separately without affecting each other’s performance or security measures.

6. Increase flexibility

With tunneling, organizations have more flexibility when it comes to setting up their networks as they can use different protocols and applications, such as VoIP and video conferencing, on different parts of their infrastructure simultaneously while still keeping everything connected securely via tunnels between them all.

7. Allow usage of unsupported network protocols

As tunnels allow different types of traffic through them, they provide support for protocols that may not be supported by some hardware devices, which might otherwise prevent certain applications from working properly on those devices due to compatibility issues.

8. Bypass ISP firewalls

Tunneling can be used for routing around restrictions imposed by local firewall rules or ISP limitations. This can be useful if you’re trying to access services blocked in certain regions or countries due to censorship laws or other regulatory issues. VPN applications are often used to bypass these restrictions and allow users to access the content they wouldn’t be able to without them.

4 disadvantages of tunneling

While there’s much to be gained from using tunneling on your network, there are also a few disadvantages to be aware of, including some security risks and compatibility issues, and the need for special hardware and software in some instances.

1. Security risks

The main disadvantage of using network tunnels is that they can create security risks if the data isn’t properly encrypted. If the tunnel is configured incorrectly, it could be possible for malicious actors to intercept and modify data being sent through the tunnel.

2. Special hardware and software requirements

To use network tunnels, you need special hardware or software that can support them. This can be expensive to implement, especially if you’re setting up multiple tunnels across different networks.

3. Compatibility issues

As with any technology, compatibility issues can occur when using different protocols or applications across networks that don’t support them. This is why it’s important to research the different tunneling protocols and check for compatibility before you deploy a network tunnel.

4. Latency increase

Latency is a double-edged sword. While some tunneling protocols can reduce latency, others may cause an increase in it. It’s important to research different tunneling protocols and determine which one works best for you before implementing them.

When should you use network tunnels?

Organizations should consider using network tunnels when they need to securely transfer large amounts of data between two or more networks. By using tunneling protocols, organizations can ensure that their data is protected while in transit and that only authorized personnel can access it.

Tunneling protocols allow for the transmission of private network data and protocol information within public networks, making them ideal for organizations with multiple offices in different locations.

Using tunneling protocols also helps protect data during business trips and prevent cybercrime by encrypting the data being transmitted. This makes it difficult for malicious actors to intercept and access sensitive information, ensuring only authorized personnel can access the data. 

Further, tunneling protocols provide an additional layer of security by authenticating users before granting them access to the network.

Example use cases of tunneling

VPNs are the most common use of tunneling. VPNs are used to provide users with secure access to a remote network over the internet. By encrypting the data being transmitted between the two networks, a VPN helps protect user data and prevent other actors from intercepting or modifying it. In countries with pervasive government censorship, VPNs are often used to bypass these restrictions and access content that would otherwise be blocked. Internet users in China and tourists routinely use VPN applications to bypass the Great Firewall of China.

Another common use case for tunneling is for data center replication. Tunneling protocols such as GRE allow organizations to replicate data from one data center to another, ensuring that all the necessary information is securely transferred over the public internet.

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Bottom Line: Understanding and using network tunneling

Network tunneling is an invaluable tool in the networking world. It provides a secure way to transport sensitive data over unsecured networks while allowing users to access remote networks and resources securely. When properly configured, tunneling can provide a great security boost, ensuring all traffic sent across the tunnel remains encrypted end-to-end.

At the same time, tunneling can be difficult to configure and maintain. It requires careful planning when setting up a tunnel and a thorough understanding of all protocols involved to ensure that everything works correctly. Further, certain types of tunnels are prone to latency issues due to their nature, so it’s important to consider this when deciding whether or not to use tunneling.

Overall, network tunneling can be a great way to ensure reliable and secure communications.

Get help establishing your own network tunnels with one of the top VPN services.

Kihara Kimachia
Kihara Kimachia
Kihara Kimachia is a writer and digital marketing consultant with over a decade of experience covering issues in emerging technology and innovation. In addition to appearing regularly in Enterprise Networking Planet, his work has been published in many leading technology publications, including TechRepublic, eSecurity Planet, Server Watch, Channel Insider, IT Business Edge, and Enterprise Storage Forum.

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