I am also a firm believer that the broadcast domain concept in Ethernet and Token Ring design (and in whatever other network technology that implements it) is a security vulnerability.
Gaining man-in-the-middle (MITM) position in an Ethernet broadcast domain is trivial task with Ettercap (and similar) and MITM is about as close as you can get to complete system compromise in the networks. MITM in an Ethernet broadcast domain allows complete compromise of all network traffic to/from a victim system, so any efforts to mitigate and complicate the MITM attacks are fully endorsed here.
Rob Van Den Brink pointed out an effective technique to disable the Ethernet broadcast domains in his ISC post yesterday.
Ensure your datacenter or cloud provider and your network administrators have PVLAN correctly implemented (as suitable) on the switches. Especially, if you are operating in any Infrastructure-as-a-Service (IaaS) clouds shared by multiple clients. My testing possibilities are very limited (and virtual only), so I really would love to hear about any issues caused by PVLAN implementation in whatever type of testing environment. Quick testing on a workstation access switch in a small Windows 2003 Active Directory domain did not reveal any immediate problems.
Cisco has published some excellent papers on VLAN security and Layer 2 attacks. I recommend the VLAN Security White Paper and the SAFE Layer 2 Security In-Depth (PDF) for further reading. Check also the Securing Networks with Private VLANs and VLAN Access Control Lists for correct implementation guidance.
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