diff --git a/etc/quantum/plugins/linuxbridge/linuxbridge_conf.ini b/etc/quantum/plugins/linuxbridge/linuxbridge_conf.ini
index b571cc0a6..2523a658a 100644
--- a/etc/quantum/plugins/linuxbridge/linuxbridge_conf.ini
+++ b/etc/quantum/plugins/linuxbridge/linuxbridge_conf.ini
@@ -1,9 +1,24 @@
 [VLANS]
+# (StrOpt) Type of network to allocate for tenant networks. The
+# default value 'local' is useful only for single-box testing and
+# provides no connectivity between hosts. You MUST change this to
+# 'vlan' and configure network_vlan_ranges below in order for tenant
+# networks to provide connectivity between hosts. Set to 'none' to
+# disable creation of tenant networks.
+#
+# Default: tenant_network_type = local
+# Example: tenant_network_type = vlan
+
 # (ListOpt) Comma-separated list of
-# <physical_network>:<vlan_min>:<vlan_max> tuples enumerating ranges
+# <physical_network>[:<vlan_min>:<vlan_max>] tuples enumerating ranges
 # of VLAN IDs on named physical networks that are available for
-# allocation.
-# network_vlan_ranges = default:1000:2999
+# allocation. All physical networks listed are available for flat and
+# VLAN provider network creation. Specified ranges of VLAN IDs are
+# available for tenant network allocation if tenant_network_type is
+# 'vlan'. If empty, only local networks may be created.
+#
+# Default: network_vlan_ranges =
+# Example: network_vlan_ranges = physnet1:1000:2999
 
 [DATABASE]
 # This line MUST be changed to actually run the plugin.
@@ -21,10 +36,13 @@ reconnect_interval = 2
 [LINUX_BRIDGE]
 # (ListOpt) Comma-separated list of
 # <physical_network>:<physical_interface> tuples mapping physical
-# network names to agent's node-specific physical network
-# interfaces. Server uses physical network names for validation but
-# ignores interfaces.
-# physical_interface_mappings = default:eth1
+# network names to the agent's node-specific physical network
+# interfaces to be used for flat and VLAN networks. All physical
+# networks listed in network_vlan_ranges on the server should have
+# mappings to appropriate interfaces on each agent.
+#
+# Default: physical_interface_mappings =
+# Example: physical_interface_mappings = physnet1:eth1
 
 [AGENT]
 # Agent's polling interval in seconds
diff --git a/etc/quantum/plugins/openvswitch/ovs_quantum_plugin.ini b/etc/quantum/plugins/openvswitch/ovs_quantum_plugin.ini
index 1b1b87087..ea3db361d 100644
--- a/etc/quantum/plugins/openvswitch/ovs_quantum_plugin.ini
+++ b/etc/quantum/plugins/openvswitch/ovs_quantum_plugin.ini
@@ -12,37 +12,63 @@ sql_connection = sqlite://
 reconnect_interval = 2
 
 [OVS]
+# (StrOpt) Type of network to allocate for tenant networks. The
+# default value 'local' is useful only for single-box testing and
+# provides no connectivity between hosts. You MUST either change this
+# to 'vlan' and configure network_vlan_ranges below or change this to
+# 'gre' and configure tunnel_id_ranges below in order for tenant
+# networks to provide connectivity between hosts. Set to 'none' to
+# disable creation of tenant networks.
+#
+# Default: tenant_network_type = local
+# Example: tenant_network_type = gre
+
 # (ListOpt) Comma-separated list of
-# <physical_network>:<vlan_min>:<vlan_max> tuples enumerating ranges
+# <physical_network>[:<vlan_min>:<vlan_max>] tuples enumerating ranges
 # of VLAN IDs on named physical networks that are available for
-# allocation.
-# network_vlan_ranges = default:1000:2999
+# allocation. All physical networks listed are available for flat and
+# VLAN provider network creation. Specified ranges of VLAN IDs are
+# available for tenant network allocation if tenant_network_type is
+# 'vlan'. If empty, only gre and local networks may be created.
+#
+# Default: network_vlan_ranges =
+# Example: network_vlan_ranges = physnet1:1000:2999
 
 # (ListOpt) Comma-separated list of <tun_min>:<tun_max> tuples
-# enumerating ranges of GRE tunnel IDs that are available for
-# allocation.
-# tunnel_id_ranges =
+# enumerating ranges of GRE tunnel IDs that are available for tenant
+# network allocation if tenant_network_type is 'gre'.
+#
+# Default: tunnel_id_ranges =
+# Example: tunnel_id_ranges = 1:1000
 
 # Do not change this parameter unless you have a good reason to.
 # This is the name of the OVS integration bridge. There is one per hypervisor.
-# The integration bridge acts as a virtual "patch port". All VM VIFs are
+# The integration bridge acts as a virtual "patch bay". All VM VIFs are
 # attached to this bridge and then "patched" according to their network
 # connectivity.
-# integration_bridge = br-int
+#
+# Default: integration_bridge = br-int
 
-# Only used if tunnel_id_ranges (above) is not empty.
-# In most cases, the default value should be fine.
-# tunnel_bridge = br-tun
+# Only used for the agent if tunnel_id_ranges (above) is not empty for
+# the server.  In most cases, the default value should be fine.
+#
+# Default: tunnel_bridge = br-tun
+
+# Uncomment this line for the agent if tunnel_id_ranges (above) is not
+# empty for the server. Set local-ip to be the local IP address of
+# this hypervisor.
+#
+# Default: local_ip = 10.0.0.3
 
 # (ListOpt) Comma-separated list of <physical_network>:<bridge> tuples
-# mapping physical network names to agent's node-specific OVS bridge
-# names. Each bridge must exist, and should have physical network
-# interface configured as a port.
-# bridge_mappings = default:br-eth1
-
-# Uncomment this line if tunnel_id_ranges (above) is not empty.
-# Set local-ip to be the local IP address of this hypervisor.
-# local_ip = 10.0.0.3
+# mapping physical network names to the agent's node-specific OVS
+# bridge names to be used for flat and VLAN networks. Each bridge must
+# exist, and should have a physical network interface configured as a
+# port. All physical networks listed in network_vlan_ranges on the
+# server should have mappings to appropriate bridges on each agent.
+#
+# Default: bridge_mappings =
+# Example: bridge_mappings = physnet1:br-eth1
 
 [AGENT]
 # Agent's polling interval in seconds
diff --git a/quantum/common/exceptions.py b/quantum/common/exceptions.py
index 0a117c3a2..bed98faff 100644
--- a/quantum/common/exceptions.py
+++ b/quantum/common/exceptions.py
@@ -137,6 +137,10 @@ class TunnelIdInUse(InUse):
                 "The tunnel ID %(tunnel_id)s is in use.")
 
 
+class TenantNetworksDisabled(QuantumException):
+    message = _("Tenant network creation is not enabled.")
+
+
 class ResourceExhausted(QuantumException):
     pass
 
diff --git a/quantum/extensions/providernet.py b/quantum/extensions/providernet.py
index 0b41494e0..204b7164c 100644
--- a/quantum/extensions/providernet.py
+++ b/quantum/extensions/providernet.py
@@ -19,11 +19,12 @@ NETWORK_TYPE = 'provider:network_type'
 PHYSICAL_NETWORK = 'provider:physical_network'
 SEGMENTATION_ID = 'provider:segmentation_id'
 
+NETWORK_TYPE_VALUES = ['flat', 'gre', 'local', 'vlan']
+
 EXTENDED_ATTRIBUTES_2_0 = {
     'networks': {
         NETWORK_TYPE: {'allow_post': True, 'allow_put': True,
-                       'validate': {'type:values': ['flat',
-                                                    'vlan']},
+                       'validate': {'type:values': NETWORK_TYPE_VALUES},
                        'default': attributes.ATTR_NOT_SPECIFIED,
                        'is_visible': True},
         PHYSICAL_NETWORK: {'allow_post': True, 'allow_put': True,
@@ -49,6 +50,8 @@ class Providernet(object):
     To create a provider VLAN network using the CLI with admin rights:
 
        (shell) net-create --tenant_id <tenant-id> <net-name> \
+       --provider:network_type vlan \
+       --provider:physical_network <physical-net> \
        --provider:segmentation_id <vlan-id>
 
     With admin rights, network dictionaries returned from CLI commands
@@ -65,7 +68,7 @@ class Providernet(object):
 
     @classmethod
     def get_description(cls):
-        return "Expose mapping of virtual networks to VLANs and flat networks"
+        return "Expose mapping of virtual networks to physical networks"
 
     @classmethod
     def get_namespace(cls):
@@ -73,7 +76,7 @@ class Providernet(object):
 
     @classmethod
     def get_updated(cls):
-        return "2012-07-23T10:00:00-00:00"
+        return "2012-09-07T10:00:00-00:00"
 
     def get_extended_resources(self, version):
         if version == "2.0":
diff --git a/quantum/plugins/linuxbridge/agent/linuxbridge_quantum_agent.py b/quantum/plugins/linuxbridge/agent/linuxbridge_quantum_agent.py
index 5b467a86e..2cb25c32d 100755
--- a/quantum/plugins/linuxbridge/agent/linuxbridge_quantum_agent.py
+++ b/quantum/plugins/linuxbridge/agent/linuxbridge_quantum_agent.py
@@ -192,6 +192,11 @@ class LinuxBridge:
         self.ensure_bridge(bridge_name, physical_interface, ips, gateway)
         return physical_interface
 
+    def ensure_local_bridge(self, network_id):
+        """Create a local bridge unless it already exists."""
+        bridge_name = self.get_bridge_name(network_id)
+        self.ensure_bridge(bridge_name)
+
     def ensure_vlan(self, physical_interface, vlan_id):
         """Create a vlan unless it already exists."""
         interface = self.get_subinterface_name(physical_interface, vlan_id)
@@ -237,7 +242,8 @@ class LinuxBridge:
                 src_device.addr.delete(ip_version=ip['ip_version'],
                                        cidr=ip['cidr'])
 
-    def ensure_bridge(self, bridge_name, interface, ips=None, gateway=None):
+    def ensure_bridge(self, bridge_name, interface=None, ips=None,
+                      gateway=None):
         """
         Create a bridge unless it already exists.
         """
@@ -259,6 +265,9 @@ class LinuxBridge:
             LOG.debug("Done starting bridge %s for subinterface %s" %
                       (bridge_name, interface))
 
+        if not interface:
+            return
+
         # Update IP info if necessary
         self.update_interface_ip_details(bridge_name, interface, ips, gateway)
 
@@ -272,7 +281,7 @@ class LinuxBridge:
                           bridge_name, e)
                 return
 
-    def add_tap_interface(self, network_id, physical_interface, vlan_id,
+    def add_tap_interface(self, network_id, physical_network, vlan_id,
                           tap_device_name):
         """
         If a VIF has been plugged into a network, this function will
@@ -297,13 +306,25 @@ class LinuxBridge:
                               tap_device_name], root_helper=self.root_helper):
                 return False
 
-        if int(vlan_id) == lconst.FLAT_VLAN_ID:
-            self.ensure_flat_bridge(network_id, physical_interface)
+        if int(vlan_id) == lconst.LOCAL_VLAN_ID:
+            self.ensure_local_bridge(network_id)
         else:
-            self.ensure_vlan_bridge(network_id, physical_interface, vlan_id)
+            physical_interface = self.interface_mappings.get(physical_network)
+            if not physical_interface:
+                LOG.error("No mapping for physical network %s" %
+                          physical_network)
+                return False
+
+            if int(vlan_id) == lconst.FLAT_VLAN_ID:
+                self.ensure_flat_bridge(network_id, physical_interface)
+            else:
+                self.ensure_vlan_bridge(network_id, physical_interface,
+                                        vlan_id)
+
         if utils.execute(['brctl', 'addif', bridge_name, tap_device_name],
                          root_helper=self.root_helper):
             return False
+
         LOG.debug("Done adding device %s to bridge %s" % (tap_device_name,
                                                           bridge_name))
         return True
@@ -317,19 +338,14 @@ class LinuxBridge:
             """
             return False
 
-        physical_interface = self.interface_mappings.get(physical_network)
-        if not physical_interface:
-            LOG.error("No mapping for physical network %s" % physical_network)
-            return False
-
         if interface_id.startswith(GATEWAY_INTERFACE_PREFIX):
             return self.add_tap_interface(network_id,
-                                          physical_interface, vlan_id,
+                                          physical_network, vlan_id,
                                           interface_id)
         else:
             tap_device_name = self.get_tap_device_name(interface_id)
             return self.add_tap_interface(network_id,
-                                          physical_interface, vlan_id,
+                                          physical_network, vlan_id,
                                           tap_device_name)
 
     def delete_vlan_bridge(self, bridge_name):
@@ -613,9 +629,18 @@ class LinuxBridgeQuantumAgentRPC:
         self.setup_rpc(interface_mappings.values())
 
     def setup_rpc(self, physical_interfaces):
-        # REVISIT try until one succeeds?
-        mac = utils.get_interface_mac(physical_interfaces[0])
+        if physical_interfaces:
+            mac = utils.get_interface_mac(physical_interfaces[0])
+        else:
+            devices = ip_lib.IPWrapper(self.root_helper).get_devices(True)
+            if devices:
+                mac = utils.get_interface_mac(devices[0].name)
+            else:
+                LOG.error("Unable to obtain MAC of any device for agent_id")
+                exit(1)
         self.agent_id = '%s%s' % ('lb', (mac.replace(":", "")))
+        LOG.info("RPC agent_id: %s" % self.agent_id)
+
         self.topic = topics.AGENT
         self.plugin_rpc = agent_rpc.PluginApi(topics.PLUGIN)
 
diff --git a/quantum/plugins/linuxbridge/common/config.py b/quantum/plugins/linuxbridge/common/config.py
index a73fdca1b..63dae9d6e 100644
--- a/quantum/plugins/linuxbridge/common/config.py
+++ b/quantum/plugins/linuxbridge/common/config.py
@@ -19,11 +19,14 @@
 
 from quantum.openstack.common import cfg
 
-DEFAULT_VLAN_RANGES = ['default:1000:2999']
-DEFAULT_INTERFACE_MAPPINGS = ['default:eth1']
+DEFAULT_VLAN_RANGES = []
+DEFAULT_INTERFACE_MAPPINGS = []
 
 
 vlan_opts = [
+    cfg.StrOpt('tenant_network_type', default='local',
+               help="Network type for tenant networks "
+               "(local, vlan, or none)"),
     cfg.ListOpt('network_vlan_ranges',
                 default=DEFAULT_VLAN_RANGES,
                 help="List of <physical_network>:<vlan_min>:<vlan_max> "
diff --git a/quantum/plugins/linuxbridge/common/constants.py b/quantum/plugins/linuxbridge/common/constants.py
index 87f908898..2ae1412ab 100644
--- a/quantum/plugins/linuxbridge/common/constants.py
+++ b/quantum/plugins/linuxbridge/common/constants.py
@@ -18,10 +18,10 @@
 
 
 FLAT_VLAN_ID = -1
+LOCAL_VLAN_ID = -2
 
-PORT_UP = "ACTIVE"
-PORT_DOWN = "DOWN"
-
-VLANID = 'vlan_id'
-PORT_ID = 'port-id'
-NET_ID = 'net-id'
+# Values for network_type
+TYPE_FLAT = 'flat'
+TYPE_VLAN = 'vlan'
+TYPE_LOCAL = 'local'
+TYPE_NONE = 'none'
diff --git a/quantum/plugins/linuxbridge/db/l2network_models_v2.py b/quantum/plugins/linuxbridge/db/l2network_models_v2.py
index ca840a285..6841cfb90 100644
--- a/quantum/plugins/linuxbridge/db/l2network_models_v2.py
+++ b/quantum/plugins/linuxbridge/db/l2network_models_v2.py
@@ -45,7 +45,7 @@ class NetworkBinding(model_base.BASEV2):
     network_id = sa.Column(sa.String(36),
                            sa.ForeignKey('networks.id', ondelete="CASCADE"),
                            primary_key=True)
-    physical_network = sa.Column(sa.String(64), nullable=False)
+    physical_network = sa.Column(sa.String(64))
     vlan_id = sa.Column(sa.Integer, nullable=False)
 
     def __init__(self, network_id, physical_network, vlan_id):
diff --git a/quantum/plugins/linuxbridge/lb_quantum_plugin.py b/quantum/plugins/linuxbridge/lb_quantum_plugin.py
index da420e59e..5aeb687d6 100644
--- a/quantum/plugins/linuxbridge/lb_quantum_plugin.py
+++ b/quantum/plugins/linuxbridge/lb_quantum_plugin.py
@@ -17,7 +17,7 @@ import logging
 import sys
 
 from quantum.api.v2 import attributes
-from quantum.common import constants
+from quantum.common import constants as q_const
 from quantum.common import exceptions as q_exc
 from quantum.common import topics
 from quantum.db import api as db_api
@@ -31,7 +31,7 @@ from quantum.openstack.common import cfg
 from quantum.openstack.common import rpc
 from quantum.openstack.common.rpc import dispatcher
 from quantum.openstack.common.rpc import proxy
-from quantum.plugins.linuxbridge.common import constants as lconst
+from quantum.plugins.linuxbridge.common import constants
 from quantum.plugins.linuxbridge.db import l2network_db_v2 as db
 from quantum import policy
 
@@ -73,7 +73,7 @@ class LinuxBridgeRpcCallbacks(dhcp_rpc_base.DhcpRpcCallbackMixin):
                      'port_id': port['id'],
                      'admin_state_up': port['admin_state_up']}
             # Set the port status to UP
-            db.set_port_status(port['id'], constants.PORT_STATUS_ACTIVE)
+            db.set_port_status(port['id'], q_const.PORT_STATUS_ACTIVE)
         else:
             entry = {'device': device}
             LOG.debug("%s can not be found in database", device)
@@ -90,7 +90,7 @@ class LinuxBridgeRpcCallbacks(dhcp_rpc_base.DhcpRpcCallbackMixin):
             entry = {'device': device,
                      'exists': True}
             # Set port status to DOWN
-            db.set_port_status(port['id'], constants.PORT_STATUS_DOWN)
+            db.set_port_status(port['id'], q_const.PORT_STATUS_DOWN)
         else:
             entry = {'device': device,
                      'exists': False}
@@ -159,6 +159,13 @@ class LinuxBridgePluginV2(db_base_plugin_v2.QuantumDbPluginV2,
         db.initialize()
         self._parse_network_vlan_ranges()
         db.sync_network_states(self.network_vlan_ranges)
+        self.tenant_network_type = cfg.CONF.VLANS.tenant_network_type
+        if self.tenant_network_type not in [constants.TYPE_LOCAL,
+                                            constants.TYPE_VLAN,
+                                            constants.TYPE_NONE]:
+            LOG.error("Invalid tenant_network_type: %s" %
+                      self.tenant_network_type)
+            sys.exit(1)
         self.agent_rpc = cfg.CONF.AGENT.rpc
         self._setup_rpc()
         LOG.debug("Linux Bridge Plugin initialization complete")
@@ -218,12 +225,17 @@ class LinuxBridgePluginV2(db_base_plugin_v2.QuantumDbPluginV2,
     def _extend_network_dict_provider(self, context, network):
         if self._check_provider_view_auth(context, network):
             binding = db.get_network_binding(context.session, network['id'])
-            network[provider.PHYSICAL_NETWORK] = binding.physical_network
-            if binding.vlan_id == lconst.FLAT_VLAN_ID:
-                network[provider.NETWORK_TYPE] = 'flat'
+            if binding.vlan_id == constants.FLAT_VLAN_ID:
+                network[provider.NETWORK_TYPE] = constants.TYPE_FLAT
+                network[provider.PHYSICAL_NETWORK] = binding.physical_network
+                network[provider.SEGMENTATION_ID] = None
+            elif binding.vlan_id == constants.LOCAL_VLAN_ID:
+                network[provider.NETWORK_TYPE] = constants.TYPE_LOCAL
+                network[provider.PHYSICAL_NETWORK] = None
                 network[provider.SEGMENTATION_ID] = None
             else:
-                network[provider.NETWORK_TYPE] = 'vlan'
+                network[provider.NETWORK_TYPE] = constants.TYPE_VLAN
+                network[provider.PHYSICAL_NETWORK] = binding.physical_network
                 network[provider.SEGMENTATION_ID] = binding.vlan_id
 
     def _process_provider_create(self, context, attrs):
@@ -245,13 +257,13 @@ class LinuxBridgePluginV2(db_base_plugin_v2.QuantumDbPluginV2,
         if not network_type_set:
             msg = _("provider:network_type required")
             raise q_exc.InvalidInput(error_message=msg)
-        elif network_type == 'flat':
+        elif network_type == constants.TYPE_FLAT:
             if segmentation_id_set:
                 msg = _("provider:segmentation_id specified for flat network")
                 raise q_exc.InvalidInput(error_message=msg)
             else:
-                segmentation_id = lconst.FLAT_VLAN_ID
-        elif network_type == 'vlan':
+                segmentation_id = constants.FLAT_VLAN_ID
+        elif network_type == constants.TYPE_VLAN:
             if not segmentation_id_set:
                 msg = _("provider:segmentation_id required")
                 raise q_exc.InvalidInput(error_message=msg)
@@ -259,20 +271,34 @@ class LinuxBridgePluginV2(db_base_plugin_v2.QuantumDbPluginV2,
                 msg = _("provider:segmentation_id out of range "
                         "(1 through 4094)")
                 raise q_exc.InvalidInput(error_message=msg)
+        elif network_type == constants.TYPE_LOCAL:
+            if physical_network_set:
+                msg = _("provider:physical_network specified for local "
+                        "network")
+                raise q_exc.InvalidInput(error_message=msg)
+            else:
+                physical_network = None
+            if segmentation_id_set:
+                msg = _("provider:segmentation_id specified for local "
+                        "network")
+                raise q_exc.InvalidInput(error_message=msg)
+            else:
+                segmentation_id = constants.LOCAL_VLAN_ID
         else:
-            msg = _("invalid provider:network_type %s" % network_type)
+            msg = _("provider:network_type %s not supported" % network_type)
             raise q_exc.InvalidInput(error_message=msg)
 
-        if physical_network_set:
-            if physical_network not in self.network_vlan_ranges:
-                msg = _("unknown provider:physical_network %s" %
-                        physical_network)
+        if network_type in [constants.TYPE_VLAN, constants.TYPE_FLAT]:
+            if physical_network_set:
+                if physical_network not in self.network_vlan_ranges:
+                    msg = _("unknown provider:physical_network %s" %
+                            physical_network)
+                    raise q_exc.InvalidInput(error_message=msg)
+            elif 'default' in self.network_vlan_ranges:
+                physical_network = 'default'
+            else:
+                msg = _("provider:physical_network required")
                 raise q_exc.InvalidInput(error_message=msg)
-        elif 'default' in self.network_vlan_ranges:
-            physical_network = 'default'
-        else:
-            msg = _("provider:physical_network required")
-            raise q_exc.InvalidInput(error_message=msg)
 
         return (network_type, physical_network, segmentation_id)
 
@@ -303,9 +329,20 @@ class LinuxBridgePluginV2(db_base_plugin_v2.QuantumDbPluginV2,
         session = context.session
         with session.begin(subtransactions=True):
             if not network_type:
-                physical_network, vlan_id = db.reserve_network(session)
+                # tenant network
+                network_type = self.tenant_network_type
+                if network_type == constants.TYPE_NONE:
+                    raise q_exc.TenantNetworksDisabled()
+                elif network_type == constants.TYPE_VLAN:
+                    physical_network, vlan_id = db.reserve_network(session)
+                else:  # TYPE_LOCAL
+                    vlan_id = constants.LOCAL_VLAN_ID
             else:
-                db.reserve_specific_network(session, physical_network, vlan_id)
+                # provider network
+                if network_type in [constants.TYPE_VLAN, constants.TYPE_FLAT]:
+                    db.reserve_specific_network(session, physical_network,
+                                                vlan_id)
+                # no reservation needed for TYPE_LOCAL
             net = super(LinuxBridgePluginV2, self).create_network(context,
                                                                   network)
             db.add_network_binding(session, net['id'],
@@ -334,8 +371,9 @@ class LinuxBridgePluginV2(db_base_plugin_v2.QuantumDbPluginV2,
             binding = db.get_network_binding(session, id)
             result = super(LinuxBridgePluginV2, self).delete_network(context,
                                                                      id)
-            db.release_network(session, binding.physical_network,
-                               binding.vlan_id, self.network_vlan_ranges)
+            if binding.vlan_id != constants.LOCAL_VLAN_ID:
+                db.release_network(session, binding.physical_network,
+                                   binding.vlan_id, self.network_vlan_ranges)
             # the network_binding record is deleted via cascade from
             # the network record, so explicit removal is not necessary
         if self.agent_rpc:
diff --git a/quantum/plugins/openvswitch/agent/ovs_quantum_agent.py b/quantum/plugins/openvswitch/agent/ovs_quantum_agent.py
index 90d7542c2..dc46d0d07 100755
--- a/quantum/plugins/openvswitch/agent/ovs_quantum_agent.py
+++ b/quantum/plugins/openvswitch/agent/ovs_quantum_agent.py
@@ -229,7 +229,7 @@ class OVSQuantumAgent(object):
         '''Provisions a local VLAN.
 
         :param net_uuid: the uuid of the network associated with this vlan.
-        :param network_type: the type of the network ('gre', 'vlan', 'flat')
+        :param network_type: the network type ('gre', 'vlan', 'flat', 'local')
         :param physical_network: the physical network for 'vlan' or 'flat'
         :param segmentation_id: the VID for 'vlan' or tunnel ID for 'tunnel'
         '''
@@ -277,6 +277,9 @@ class OVSQuantumAgent(object):
                                  in_port=self.int_ofports[physical_network],
                                  dl_vlan=segmentation_id,
                                  actions="mod_vlan_vid:%s,normal" % lvid)
+        elif network_type == constants.TYPE_LOCAL:
+            # no flows needed for local networks
+            pass
         else:
             LOG.error("provisioning unknown network type %s for net-id=%s" %
                       (network_type, net_uuid))
@@ -311,6 +314,9 @@ class OVSQuantumAgent(object):
             br = self.int_br
             br.delete_flows(in_port=self.int_ofports[lvm.physical_network],
                             dl_vlan=lvm.segmentation_id)
+        elif lvm.network_type == constants.TYPE_LOCAL:
+            # no flows needed for local networks
+            pass
         else:
             LOG.error("reclaiming unknown network type %s for net-id=%s" %
                       (lvm.network_type, net_uuid))
@@ -325,7 +331,7 @@ class OVSQuantumAgent(object):
 
         :param port: a ovslib.VifPort object.
         :param net_uuid: the net_uuid this port is to be associated with.
-        :param network_type: the type of the network ('gre', 'vlan', 'flat')
+        :param network_type: the network type ('gre', 'vlan', 'flat', 'local')
         :param physical_network: the physical network for 'vlan' or 'flat'
         :param segmentation_id: the VID for 'vlan' or tunnel ID for 'tunnel'
         '''
diff --git a/quantum/plugins/openvswitch/common/config.py b/quantum/plugins/openvswitch/common/config.py
index d89a970eb..194650a57 100644
--- a/quantum/plugins/openvswitch/common/config.py
+++ b/quantum/plugins/openvswitch/common/config.py
@@ -17,8 +17,8 @@
 from quantum.openstack.common import cfg
 
 
-DEFAULT_BRIDGE_MAPPINGS = ['default:br-eth1']
-DEFAULT_VLAN_RANGES = ['default:1000:2999']
+DEFAULT_BRIDGE_MAPPINGS = []
+DEFAULT_VLAN_RANGES = []
 DEFAULT_TUNNEL_RANGES = []
 
 database_opts = [
@@ -34,6 +34,9 @@ ovs_opts = [
     cfg.ListOpt('bridge_mappings',
                 default=DEFAULT_BRIDGE_MAPPINGS,
                 help="List of <physical_network>:<bridge>"),
+    cfg.StrOpt('tenant_network_type', default='local',
+               help="Network type for tenant networks "
+               "(local, vlan, gre, or none)"),
     cfg.ListOpt('network_vlan_ranges',
                 default=DEFAULT_VLAN_RANGES,
                 help="List of <physical_network>:<vlan_min>:<vlan_max> "
diff --git a/quantum/plugins/openvswitch/common/constants.py b/quantum/plugins/openvswitch/common/constants.py
index d23f2cd0f..20a22a8f1 100644
--- a/quantum/plugins/openvswitch/common/constants.py
+++ b/quantum/plugins/openvswitch/common/constants.py
@@ -23,6 +23,8 @@ TUNNEL = 'tunnel'
 TYPE_FLAT = 'flat'
 TYPE_VLAN = 'vlan'
 TYPE_GRE = 'gre'
+TYPE_LOCAL = 'local'
+TYPE_NONE = 'none'
 
 # Name prefixes for veth device pair linking the integration bridge
 # with the physical bridge for a physical network
diff --git a/quantum/plugins/openvswitch/ovs_models_v2.py b/quantum/plugins/openvswitch/ovs_models_v2.py
index fa8c28c40..119bd8c7a 100644
--- a/quantum/plugins/openvswitch/ovs_models_v2.py
+++ b/quantum/plugins/openvswitch/ovs_models_v2.py
@@ -64,7 +64,8 @@ class NetworkBinding(model_base.BASEV2):
     network_id = Column(String(36),
                         ForeignKey('networks.id', ondelete="CASCADE"),
                         primary_key=True)
-    network_type = Column(String(32), nullable=False)  # 'gre', 'vlan', 'flat'
+    # 'gre', 'vlan', 'flat', 'local'
+    network_type = Column(String(32), nullable=False)
     physical_network = Column(String(64))
     segmentation_id = Column(Integer)  # tunnel_id or vlan_id
 
diff --git a/quantum/plugins/openvswitch/ovs_quantum_plugin.py b/quantum/plugins/openvswitch/ovs_quantum_plugin.py
index a0c6568db..fde8bd6df 100644
--- a/quantum/plugins/openvswitch/ovs_quantum_plugin.py
+++ b/quantum/plugins/openvswitch/ovs_quantum_plugin.py
@@ -197,6 +197,14 @@ class OVSQuantumPluginV2(db_base_plugin_v2.QuantumDbPluginV2,
         ovs_db_v2.sync_vlan_allocations(self.network_vlan_ranges)
         self._parse_tunnel_id_ranges()
         ovs_db_v2.sync_tunnel_allocations(self.tunnel_id_ranges)
+        self.tenant_network_type = cfg.CONF.OVS.tenant_network_type
+        if self.tenant_network_type not in [constants.TYPE_LOCAL,
+                                            constants.TYPE_VLAN,
+                                            constants.TYPE_GRE,
+                                            constants.TYPE_NONE]:
+            LOG.error("Invalid tenant_network_type: %s" %
+                      self.tenant_network_type)
+            sys.exit(1)
         self.agent_rpc = cfg.CONF.AGENT.rpc
         self.setup_rpc()
 
@@ -280,6 +288,9 @@ class OVSQuantumPluginV2(db_base_plugin_v2.QuantumDbPluginV2,
             elif binding.network_type == constants.TYPE_VLAN:
                 network[provider.PHYSICAL_NETWORK] = binding.physical_network
                 network[provider.SEGMENTATION_ID] = binding.segmentation_id
+            elif binding.network_type == constants.TYPE_LOCAL:
+                network[provider.PHYSICAL_NETWORK] = None
+                network[provider.SEGMENTATION_ID] = None
 
     def _process_provider_create(self, context, attrs):
         network_type = attrs.get(provider.NETWORK_TYPE)
@@ -314,20 +325,44 @@ class OVSQuantumPluginV2(db_base_plugin_v2.QuantumDbPluginV2,
                 msg = _("provider:segmentation_id out of range "
                         "(1 through 4094)")
                 raise q_exc.InvalidInput(error_message=msg)
+        elif network_type == constants.TYPE_GRE:
+            if physical_network_set:
+                msg = _("provider:physical_network specified for GRE "
+                        "network")
+                raise q_exc.InvalidInput(error_message=msg)
+            else:
+                physical_network = None
+            if not segmentation_id_set:
+                msg = _("provider:segmentation_id required")
+                raise q_exc.InvalidInput(error_message=msg)
+        elif network_type == constants.TYPE_LOCAL:
+            if physical_network_set:
+                msg = _("provider:physical_network specified for local "
+                        "network")
+                raise q_exc.InvalidInput(error_message=msg)
+            else:
+                physical_network = None
+            if segmentation_id_set:
+                msg = _("provider:segmentation_id specified for local "
+                        "network")
+                raise q_exc.InvalidInput(error_message=msg)
+            else:
+                segmentation_id = None
         else:
-            msg = _("invalid provider:network_type %s" % network_type)
+            msg = _("provider:network_type %s not supported" % network_type)
             raise q_exc.InvalidInput(error_message=msg)
 
-        if physical_network_set:
-            if physical_network not in self.network_vlan_ranges:
-                msg = _("unknown provider:physical_network %s" %
-                        physical_network)
+        if network_type in [constants.TYPE_VLAN, constants.TYPE_FLAT]:
+            if physical_network_set:
+                if physical_network not in self.network_vlan_ranges:
+                    msg = _("unknown provider:physical_network %s" %
+                            physical_network)
+                    raise q_exc.InvalidInput(error_message=msg)
+            elif 'default' in self.network_vlan_ranges:
+                physical_network = 'default'
+            else:
+                msg = _("provider:physical_network required")
                 raise q_exc.InvalidInput(error_message=msg)
-        elif 'default' in self.network_vlan_ranges:
-            physical_network = 'default'
-        else:
-            msg = _("provider:physical_network required")
-            raise q_exc.InvalidInput(error_message=msg)
 
         return (network_type, physical_network, segmentation_id)
 
@@ -358,16 +393,24 @@ class OVSQuantumPluginV2(db_base_plugin_v2.QuantumDbPluginV2,
         session = context.session
         with session.begin(subtransactions=True):
             if not network_type:
-                try:
+                # tenant network
+                network_type = self.tenant_network_type
+                if network_type == constants.TYPE_NONE:
+                    raise q_exc.TenantNetworksDisabled()
+                elif network_type == constants.TYPE_VLAN:
                     (physical_network,
                      segmentation_id) = ovs_db_v2.reserve_vlan(session)
-                    network_type = constants.TYPE_VLAN
-                except q_exc.NoNetworkAvailable:
+                elif network_type == constants.TYPE_GRE:
                     segmentation_id = ovs_db_v2.reserve_tunnel(session)
-                    network_type = constants.TYPE_GRE
+                # no reservation needed for TYPE_LOCAL
             else:
-                ovs_db_v2.reserve_specific_vlan(session, physical_network,
-                                                segmentation_id)
+                # provider network
+                if network_type in [constants.TYPE_VLAN, constants.TYPE_FLAT]:
+                    ovs_db_v2.reserve_specific_vlan(session, physical_network,
+                                                    segmentation_id)
+                elif network_type == constants.TYPE_GRE:
+                    ovs_db_v2.reserve_specific_tunnel(session, segmentation_id)
+                # no reservation needed for TYPE_LOCAL
             net = super(OVSQuantumPluginV2, self).create_network(context,
                                                                  network)
             ovs_db_v2.add_network_binding(session, net['id'], network_type,
@@ -400,7 +443,8 @@ class OVSQuantumPluginV2(db_base_plugin_v2.QuantumDbPluginV2,
             if binding.network_type == constants.TYPE_GRE:
                 ovs_db_v2.release_tunnel(session, binding.segmentation_id,
                                          self.tunnel_id_ranges)
-            else:
+            elif binding.network_type in [constants.TYPE_VLAN,
+                                          constants.TYPE_FLAT]:
                 ovs_db_v2.release_vlan(session, binding.physical_network,
                                        binding.segmentation_id,
                                        self.network_vlan_ranges)
diff --git a/quantum/tests/unit/linuxbridge/test_defaults.py b/quantum/tests/unit/linuxbridge/test_defaults.py
index f3361e72a..d2532f853 100644
--- a/quantum/tests/unit/linuxbridge/test_defaults.py
+++ b/quantum/tests/unit/linuxbridge/test_defaults.py
@@ -32,11 +32,10 @@ class ConfigurationTest(unittest.TestCase):
                          cfg.CONF.AGENT.polling_interval)
         self.assertEqual('sudo',
                          cfg.CONF.AGENT.root_helper)
-
-        ranges = cfg.CONF.VLANS.network_vlan_ranges
-        self.assertEqual(1, len(ranges))
-        self.assertEqual('default:1000:2999', ranges[0])
-
-        mappings = cfg.CONF.LINUX_BRIDGE.physical_interface_mappings
-        self.assertEqual(1, len(mappings))
-        self.assertEqual('default:eth1', mappings[0])
+        self.assertEqual('local',
+                         cfg.CONF.VLANS.tenant_network_type)
+        self.assertEqual(0,
+                         len(cfg.CONF.VLANS.network_vlan_ranges))
+        self.assertEqual(0,
+                         len(cfg.CONF.LINUX_BRIDGE.
+                             physical_interface_mappings))
diff --git a/quantum/tests/unit/openvswitch/test_ovs_defaults.py b/quantum/tests/unit/openvswitch/test_ovs_defaults.py
index c1d09cde3..2a3d4283c 100644
--- a/quantum/tests/unit/openvswitch/test_ovs_defaults.py
+++ b/quantum/tests/unit/openvswitch/test_ovs_defaults.py
@@ -29,14 +29,7 @@ class ConfigurationTest(unittest.TestCase):
         self.assertEqual(2, cfg.CONF.DATABASE.reconnect_interval)
         self.assertEqual(2, cfg.CONF.AGENT.polling_interval)
         self.assertEqual('sudo', cfg.CONF.AGENT.root_helper)
-
-        mappings = cfg.CONF.OVS.bridge_mappings
-        self.assertEqual(1, len(mappings))
-        self.assertEqual('default:br-eth1', mappings[0])
-
-        ranges = cfg.CONF.OVS.network_vlan_ranges
-        self.assertEqual(1, len(ranges))
-        self.assertEqual('default:1000:2999', ranges[0])
-
-        ranges = cfg.CONF.OVS.tunnel_id_ranges
-        self.assertEqual(0, len(ranges))
+        self.assertEqual('local', cfg.CONF.OVS.tenant_network_type)
+        self.assertEqual(0, len(cfg.CONF.OVS.bridge_mappings))
+        self.assertEqual(0, len(cfg.CONF.OVS.network_vlan_ranges))
+        self.assertEqual(0, len(cfg.CONF.OVS.tunnel_id_ranges))