Configuring PPPoE client/server

Question

I have a lab where I would like to configure an PPPoE client and server. I have a ISP and a router device who are both connected to each other with the FaseEthernet0/1 interface.

Client config:

interface FastEthernet0/1
 no ip address
 duplex auto
 speed auto
 pppoe enable
 pppoe-client dial-pool-number 1
!
interface Dialer1
 mtu 1492
 ip address negotiated
 encapsulation ppp
 dialer pool 1
 ppp chap password 0 MyPassword

ISP config:

username CPE password 0 MyPassword
!
bba-group pppoe MyGroup
 virtual-template 1
 sessions per-mac limit 2
!
interface FastEthernet0/1
 no ip address
 duplex auto
 speed auto
 pppoe enable group MyGroup
!
interface Virtual-Template1
 ip address 10.0.0.1 255.255.255.0
 peer default ip address pool MyPool
 ppp authentication chap callin
!
ip local pool MyPool 10.0.0.2 10.0.0.254

This does not seem to establish a connection. When I run show pppoe session on the client router, I get the following output:

router#show pppoe session 
     1 client session 

Uniq ID  PPPoE  RemMAC          Port                  Source   VA         State
           SID  LocMAC                                         VA-st
    N/A      0  0000.0000.0000  Fa0/1                 Di1      N/A        PADISNT 
                0000.0000.0000   

I can't ping from the client to the ISP. What is wrong and how to fix it?

Edit: the pysical interfaces where down, this fixed it a bit. Now it prints the following text on the console every few seconds:

*Jan  1 01:55:46.519: %DIALER-6-BIND: Interface Vi2 bound to profile Di1
*Jan  1 01:55:46.523: %LINK-3-UPDOWN: Interface Virtual-Access2, changed state to up
*Jan  1 01:55:46.543: %DIALER-6-UNBIND: Interface Vi2 unbound from profile Di1
*Jan  1 01:55:46.547: %LINK-3-UPDOWN: Interface Virtual-Access2, changed state to down

Disabling authentication fixed it and brings the PPPoE up. But that still is not really a solution.

Answer 1

On your ISP router, you're asking for a CHAP authentication with username CPE and password MyPassword:

username CPE password 0 MyPassword

and

interface Virtual-Template1
 ip address 10.0.0.1 255.255.255.0
 peer default ip address pool MyPool
 ppp authentication chap callin

Yet, on your client router, you don't provide a username:

interface Dialer1
 mtu 1492
 ip address negotiated
 encapsulation ppp
 dialer pool 1
 ppp chap password 0 MyPassword

This obviously fails at the authentication stage! And that's why when you disable authentication it works correctly.

Just add

ppp chap hostname CPE

to your dialer configuration:

interface Dialer1
 mtu 1492
 ip address negotiated
 encapsulation ppp
 dialer pool 1
 ppp chap hostname CPE
 ppp chap password 0 MyPassword