When working with providers I have many times changed my encapsulation to hdlc to support the test. Also whenever I am working in a lan environment and I am conducting loopback testing I do the same.
Let suppose I was working no an ATM interface and I placed it in loopback, would that provider be able to send atm cells through that loop, or is it an absolute requirement that my encap be changed to hdlc.
I am able to send non hdlc traffic to a dax loop, but am not sure if this would work on a rtr interface.
Many thanks for any response.
in short, you don't have to run HDLC to run loop tests. One reason why people prefers to do it with HDLC, is because IOS will clearly tell in show interface the loop condition when detected, so it's an easy diagnostic.
Also note there are various levels of loops test, some are done at CSU/DSU level with patters sent and check. Some router interface also support these. In this case the encapsulation used is absolutely irrelevant.
Hope this helps, if so please rate post!