Hot Standby Routing Protocol (HSRP) operates by creating a virtual IP Address and virtual MAC Address for other devices (such as the Switch network of your LAN) to use as their "next hop". As a result, you can effectively have 2 Routers sitting there with one of them acting as the "primrary" Router while the other sits there waiting.

Good for redundancy, HSRP is realistically only operated within a larger network with equipment and Internet links to spare. Coupled with BGP (Border Gateway Protocol) it can be used to do minor traffic shaping without major setup hassles.

HSRP operates by sending a proprietary packet to and from each Router in the HSRP group at pre-determined intervals (usually 3 or fewer seconds). If 3 consecutive packets fail (<9 seconds), the other router "assumes" control of the virtual address and routes the incoming packets. HSRP also operates by allowing one or more Routers to "preempt" each other and take precedence over the others in their group. Also, groups can preempt other groups and so on (although it gets REALLY messy with more than 3 Routers in each of 2 groups).

The other thing that HSRP does and is not very well documented is that the Router changes the appropriate IP header information to change the return route to be through it and not thhe virtual address.

Overall for proper network reliability, a combination of OSPF (Open Shortest Path First - an algorithm-based weighting for link status and latency times based on Dijkstra's algo), HSRP and either BGP or EIGRP (Extended Internal Gateway Routing Protocol - the "internal" version of BGP for LAN routing) will allow a network to be fully configurable to handle slow traffic, dropped links and multiple areas and IP Address ranges being routed through different links.

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