Not decrementing the IP TTL at each LSR hop no more breaks the IP TTL mechanisms than does frame-relay or ATM.
It should be the business of ISPs to hide or not to hide the lower layer infrastructures. Unless someone really wants to use 'traceroute' to see the DACs, ADMs, verilinks, DL3100s, etc. A more flexible 'knob' would be cool, something like combining the 'cos' bits in the labels with the decision to decremening or not. This will give the management station the power to 'trace' even the regular trace packet can't do.
- paul
ps. In fact, there may even be some ISP's that would prefer that their internal L2 infrastructure remain invisible.
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