The IP•Tube E2 is used to interconnect Ethernet LANs through an IP network. Ethernet frames that are destined for a device located on the remote network are encapsulated into IP packets. The IP packets, with the encapsulated Ethernet frames, are sent to the IP address of the destination network's IP•Tube E2 where the IP envelope is removed and the original Ethernet Frames are delivered to the destination network's Ethernet device.

The Ethernet MAC layer source addresses that are active on the internal LAN are stored in a filtering database. Packets with a MAC destination that do not match a MAC address entry for the receiving port are encapsulated in an IP packet that is forwarded to the remote network.