Definition of VIRTUAL CIRCUIT in Network Encyclopedia.

What is Virtual Circuit?

Virtual Circuit is a logical path between nodes in a network, typically a telecommunications network. The path is made up of discrete segments of the network that are connected using switches.

The nodes on the circuit communicate as if they were directly connected using physical wires, but the switches actually establish and tear down the virtual communication path.

You can change the logical paths within the network by simply reconfiguring the switches to establish new paths and tear down old ones – you need not manually reconnect wires to create new circuits.

There are two types of virtual circuits:

• Permanent virtual circuits (PVCs): The switches are set up manually by the communication management station (the telco’s central office) and offer performance comparable to dedicated lines. These circuits are always on and are generally used for high-speed connectivity. PVCs are a costly solution for wide area networks (WANs) because they require telco resources (switches) to be dedicated to a particular communication circuit, whether or not that circuit is being used. 
• Switched virtual circuits (SVCs): The switches are set up automatically when a communication session is established. SVCs are freed up when the session is finished and can be used for establishing other communication paths. Ordinary telephone communication functions in this fashion. SVCs are generally used in WANs where backups to dedicated leased lines are required and are charged by the amount of time or traffic. 

One example of WAN technology that uses virtual circuits is frame relay, which enables PVCs to be established between nodes over a public or private carrier network. Another example is X.25 networking technology.