Which statement regarding VPLS is FALSE?

The statement claiming that each Provider Edge (PE) router maintains a Virtual Routing and Forwarding (VRF) instance for each VPLS is inaccurate. In a VPLS environment, the key is that VPLS is designed specifically to emulate Ethernet Layer 2 connectivity over a Layer 3 MPLS network.

In VPLS, the service operates using a shared broadcast domain. Each PE does not require a separate VRF instance for each VPLS instance; rather, VPLS uses a system of labels to distinguish between different VPLS instances without needing the isolation that VRFs provide. By employing a single forwarding table at each PE, the VPLS setup simplifies management and facilitates the distribution of broadcast and multicast traffic across the network.

The other statements about VPLS being a Layer 2 service, emulating a switched Ethernet service, and customers being unaware of the service provider’s network are accurate characteristics of VPLS. This service is indeed built to simulate an Ethernet LAN and operates transparently from the customer's perspective, reinforcing that only the service delivery and not the underlying infrastructure is visible to end-users.