Mobile IP provides the following alternative modes for the acquisition of a care-of address:
A foreign agent provides a foreign agent care-of address, which is advertised to the mobile node through agent advertisement messages. The care-of address is usually the IP address of the foreign agent that sends the advertisements. The foreign agent is the endpoint of the tunnel. When the foreign agent receives datagrams through a tunnel, the foreign agent de-encapsulates the datagrams. Then the foreign agent delivers the inner datagram to the mobile node. Consequently, many mobile nodes can share the same care-of address. Bandwidth is important on wireless links. Wireless links are good candidates from which foreign agents can provide Mobile IP services to higher-bandwidth wired links.
A mobile node acquires a co-located care-of address as a local IP address through some external means. The mobile node then associates with one of its own network interfaces. The mobile node might acquire the address through DHCP as a temporary address. The address might also be owned by the mobile node as a long-term address. However, the mobile node can only use the address while visiting the subnet to which this care-of address belongs. When using a co-located care-of address, the mobile node serves as the endpoint of the tunnel. The mobile node performs de-encapsulation of the datagrams that are tunneled to the mobile node.
A Co-located care-of address enables a mobile node to function without a foreign agent. Consequently, a mobile node can use a co-located care-of address in networks that have not deployed a foreign agent.
If a mobile node is using a co-located care-of address, the mobile node must be located on the link that is identified by the network prefix of the care-of address. Otherwise, datagrams that are destined to the care-of address cannot be delivered.