If PPP is enabled for both compression and encryption, which one happens first, compression or encryption, before the PPP sends the data over the physical link?
Compression technologies rely on the fact that the data has patterns that can be "coded." Here's a simple (simplistic?) example:
Instead of repeating long strings of 1s or 0s, use the string "00" followed by the number of 0s. So a string of 20 0s could be represented by "0014" (hex 14 = 20). This would shorten the stream by 16 bytes.
But if you encrypt the data, then it appears to be random -- i.e. there should be no discernible patterns. This would make compression impossible.
So a shorter answer to your question is: compress first, then encrypt.