PPP authentication and compression

PPP is a simple encapsulation to configure on Cisco routers, with the ability to add multiple features once enabled.  TO start, the only configuration necessary is to enter into the interface configuration mode and type:

R1(config-if)#encapsulation ppp

Do that on both sides of your WAN link and you're good to go.

The CCNA exam requires feature configuration for PPP links, however, and mainly CHAP authentication.  CHAP is an authentication method that sends MD5 hashes of a shared password between configured peers.  The configuration steps are:

1. Configure a hostname for both routers
2. Create a user on each router with the hostname of the peer, being certain the hostname is case-correct.  Also be certain that the password is identical for both peers.  As stated above, username and password are both case sensitive
3. Enable ppp encapsulation on the interfaces of both peers
4. Enable CHAP authentication on both peers

Voila, that's it.  Before you enable authentication on both sides, a debug will show:

 R2(config)#
*Mar  1 00:09:57.055: Se0/0 PPP: Authorization required
*Mar  1 00:09:57.075: Se0/0 PPP: No authorization without authentication
*Mar  1 00:09:57.075: Se0/0 CHAP: I CHALLENGE id 1 len 23 from "R1"
*Mar  1 00:09:57.091: Se0/0 CHAP: Unable to authenticate for peer
*Mar  1 00:09:58.051: %LINEPROTO-5-UPDOWN: Line protocol on Interface Serial0/0, changed state to down

And the other troubleshooting step would be to show the brief interface statistics:

R2#sho ip int brie
Interface       IP-Address   OK? Method Status      Protocol
FastEthernet0/0 10.2.1.1        YES manual up       up 
Serial0/0       192.168.2.2     YES manual up       down
FastEthernet0/1 10.20.1.1       YES manual up       up 
Serial0/1       192.168.3.1     YES manual up       up 

Here you see on Serial0/0 that we have a status "up" and Protocol "down" which is the classic case of layer 1 being satisfactory but layer 2 is the problem.  This is always an issue with the L2 protocol, whether it is a mis-matched encapsulation type or misconfigured authentication or compression.

Compression

Configuring compression on a PPP connection is quite simple, also.  The caveat is that you need to do it on both ends or the link will once again fail (you will see this with an up/down status on the connected interfaces).