System and method for providing a layer 2 switch in the access network that switches based upon one or more carrier tags identifying customer traffic. Customer traffic conforming to any variety of different layer 1 or layer 2 protocols may be encapsulated and identified according to carrier tag values. The layer 2 switch may determine how to handle the traffic by interpreting and manipulating the carrier tag values. The layer 2 switch may be capable of switching TDM input traffic to either TDM or packet output traffic, and switching packetized input traffic to either TDM or packet output traffic. Handling classification values may also be processed by the layer 2 switch to affect prioritization of handling of encapsulated traffic.