IP. Tell me, what I'm missing.
Re-reading your question I think that maybe I should point to a common mistake (which I used to do myself before I learned better): the PPPoE (or PPTP) is only used between the host and the modem, not to the ISP. The modem opens a PPPoA connection to the ISP and converts the data from the PPPoE packets into the PPPoA packets.
Does that plug the missing piece in your puzzle?
Cheers,
--Amos
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