BGP confederation divide an AS into sub AS running eBGP on every router, or we can say that it is a group of router running eBGP, but known as a single AS from outside. BGP confederation can reduce the iBGP mesh inside an AS, besides
BGP route reflector. BGP confederation is more complex than route reflector, since we have to configure for every router inside a confederation.
Here is our topology. We use 4 router running BGP, consist of 3 router within a confederation and 1 router from outside. Router R4 will recognize ASN R3 as 100, not 65003. To activate BGP confederation on cisco router, use the following command:
1: bgp confederation identifier <asn>
2: bgp confederation peers <sub-asn 1> <sub-asn 2> <sub-asn ...>
bgp confederation identifier refer to confederation's ASN, in this topology, our confederation's ASN is 100. And bgp confederation peers refer to sub ASN for all peers router.