The BT FTTC service uses PPPoE as its mode of connection via the VDSL modem.
Although the default Ethernet MTU is 1500, when using PPPoE, 8 bytes are used for the PPPoE header, this then reduces the MTU to 1492.
There are some devices such as the Vodafone SureSignal (a 3G Femotocell), that have an embedded IPSec client that will not connect over a connection that has an MTU of below 1500. There are other applications such as the Cisco AnyConnect client that can also have issues with an MTU of below 1500
There is however a method to increase the MTU to 1500 which has been documented in RFC 4638. This method is to increase the MTU on the interface running the PPPoE connection to 1508 which are called “Baby Jumbo Frames”, and to then instruct the PPPoE client to use an MTU of 1500. The BT FTTC service supports this method, as do some modern Cisco routers such as the ISR 1812, this then enables you to run an MTU of 1500 over the connection.
To enable this method, there are two extra commands that you need to enable on the physical interface the you are using for PPPoE connection
The first part is to set the interface to use baby jumbo frames
The second part is to set the PPPoE dialler to negotiate an MTU of 1500 as per RFC 4638
pppoe-client ppp-max-payload 1500
A complete interface config would look something along the lines of
description BT FTTC PPPoE mtu 1508 no ip address ip access-group FastEthernet0 in no ip redirects no ip unreachables no ip proxy-arp ip virtual-reassembly in duplex auto speed auto pppoe enable group global pppoe-client dial-pool-number 1 pppoe-client ppp-max-payload 1500 no cdp enable
The Dialer interface does does not need to be changed, neither do any internal interfaces.
With these changes you should have an MTU of 1500 over the connection, devices and/or applications that had issues with an MTU of 1492 should no longer be affected.