This is where the number of labels comes into play. If we
talk about LSR for not that huge IPS (having not that
much of core LSPs), I'm afraid, this can require to get
back to the old good conception of FEC per prefix :)
When we were small and using Cisco 7200's as BGP-free core
routers, we were load balancing just fine. And this was a
network doing less than 500Mbps of aggregated traffic.

Of course, things are far more different nowadays :-).

I meant that in order to do LB on labels alone (to have enough of hash-keys for micro-flows), you need a large enough set of labels in the core and more or less uniformly distributed traffic over these labels. If you have, say, 10 PoPs and 90 core tunnels, it's very probable that 20% of them carry 80% of traffic. But label-based hash will share labels 50:50. This is why label alone is not sufficient for limited set of LSPs and you need to construct hashes with more parameters from payload.

When it's not a problem for a software-based platform, I'm afraid, cheap network processors, used in switches, can't do that. Thus I'm not sure, they are sufficient for a good LSR. Despite they have plenty of power for lookups.
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