diff --git a/src/tests/kits/net/ppp/headers/KPPPDefs.h b/src/tests/kits/net/ppp/headers/KPPPDefs.h
index dc9fbe488b..39c4f2fa3f 100644
--- a/src/tests/kits/net/ppp/headers/KPPPDefs.h
+++ b/src/tests/kits/net/ppp/headers/KPPPDefs.h
@@ -65,10 +65,12 @@ enum {
 	PPP_NO_FLAGS = 0x00,
 	PPP_ALWAYS_ALLOWED = 0x01,
 		// protocol may send/receive in PPP_ESTABLISHMENT_PHASE
-	PPP_NEEDS_DOWN = 0x02
+	PPP_NEEDS_DOWN = 0x02,
 		// protocol needs a Down() in addition to a Reset() to
 		// terminate the connection properly (losing the connection
 		// still results in a Reset() only)
+	PPP_NOT_IMPORTANT = 0x03
+		// if this protocol fails to go up we do not disconnect
 };
 
 // phase when the protocol is brought up
diff --git a/src/tests/kits/net/ppp/headers/KPPPDevice.h b/src/tests/kits/net/ppp/headers/KPPPDevice.h
index 3e4ce0d4a4..1f1d80990c 100644
--- a/src/tests/kits/net/ppp/headers/KPPPDevice.h
+++ b/src/tests/kits/net/ppp/headers/KPPPDevice.h
@@ -29,6 +29,7 @@ class PPPDevice {
 			{ return fMTU; }
 		virtual uint32 PreferredMTU() const = 0;
 		
+		// these calls must not block
 		virtual void Up() = 0;
 		virtual void Down() = 0;
 		virtual void Listen() = 0;
diff --git a/src/tests/kits/net/ppp/headers/KPPPInterface.h b/src/tests/kits/net/ppp/headers/KPPPInterface.h
index b40c7d8815..c9f14e1c8a 100644
--- a/src/tests/kits/net/ppp/headers/KPPPInterface.h
+++ b/src/tests/kits/net/ppp/headers/KPPPInterface.h
@@ -19,6 +19,8 @@ class PPPOptionHandler;
 
 
 class PPPInterface {
+		friend class PPPStateMachine;
+
 	private:
 		// copies are not allowed!
 		PPPInterface(const PPPInterface& copy);
@@ -136,6 +138,7 @@ class PPPInterface {
 		PPPLCP fLCP;
 		PPPReportManager fReportManager;
 		ifnet *fIfnet;
+		thread_id fUpThread;
 		
 		ppp_manager_info *fManager;
 		
diff --git a/src/tests/kits/net/ppp/headers/KPPPReportDefs.h b/src/tests/kits/net/ppp/headers/KPPPReportDefs.h
index 0846158b0e..99fc3a944f 100644
--- a/src/tests/kits/net/ppp/headers/KPPPReportDefs.h
+++ b/src/tests/kits/net/ppp/headers/KPPPReportDefs.h
@@ -11,7 +11,8 @@
 enum PPP_REPORT_FLAGS {
 	PPP_NO_REPORT_FLAGS = 0,
 	PPP_WAIT_FOR_REPLY = 0x1,
-	PPP_REMOVE_AFTER_REPORT = 0x2
+	PPP_REMOVE_AFTER_REPORT = 0x2,
+	PPP_NO_REPLY_TIMEOUT = 0x4
 };
 
 // report types
@@ -23,6 +24,7 @@ enum PPP_REPORT_TYPE {
 
 // report codes (type-specific)
 enum PPP_CONNECTION_REPORT_CODES {
+	PPP_GOING_UP = 0,
 	PPP_UP_SUCCESSFUL = 1,
 	PPP_DOWN_SUCCESSFUL = 2,
 	PPP_UP_ABORTED = 3,
diff --git a/src/tests/kits/net/ppp/headers/KPPPReportManager.h b/src/tests/kits/net/ppp/headers/KPPPReportManager.h
index 0321d69f9b..7bdc37c1fa 100644
--- a/src/tests/kits/net/ppp/headers/KPPPReportManager.h
+++ b/src/tests/kits/net/ppp/headers/KPPPReportManager.h
@@ -7,6 +7,8 @@
 #include "LockerHelper.h"
 
 
+#define PPP_REPLY(sender, value) send_data_with_timeout((sender), (value), NULL, 0, B_REPORT_TIMEOUT)
+
 class PPPReportManager {
 	public:
 		PPPReportManager(BLocker& lock);
diff --git a/src/tests/kits/net/ppp/src/KPPPInterface.cpp b/src/tests/kits/net/ppp/src/KPPPInterface.cpp
index 94c5203661..0b0d739274 100644
--- a/src/tests/kits/net/ppp/src/KPPPInterface.cpp
+++ b/src/tests/kits/net/ppp/src/KPPPInterface.cpp
@@ -26,7 +26,7 @@
 PPPInterface::PPPInterface(driver_settings *settings, PPPInterface *parent = NULL)
 	: fSettings(dup_driver_settings(settings)),
 	fStateMachine(*this), fLCP(*this), fReportManager(StateMachine().Locker()),
-	fIfnet(NULL), fLinkMTU(1500), fAccessing(0), fChildrenCount(0),
+	fIfnet(NULL), fUpThread(-1), fLinkMTU(1500), fAccessing(0), fChildrenCount(0),
 	fDevice(NULL), fFirstEncapsulator(NULL), fLock(StateMachine().Locker())
 {
 	if(get_module(PPP_MANAGER_MODULE_NAME, (module_info**) &fManager) != B_OK)
@@ -344,6 +344,9 @@ PPPInterface::EncapsulatorFor(uint16 protocol,
 bool
 PPPInterface::AddChild(PPPInterface *child)
 {
+	if(!child || child->Mode() != Mode())
+		return false;
+	
 	LockerHelper locker(fLock);
 	
 	if(fChildren.HasItem(child) || !fChildren.AddItem(child))
@@ -402,28 +405,88 @@ PPPInterface::SetDialOnDemand(bool dialondemand = true)
 	// check if we need to register/unregister
 	if(!Ifnet() && fDialOnDemand)
 		RegisterInterface();
-	else if(Ifnet() && !fDialOnDemand && Phase() == PPP_DOWN_PHASE)
+	else if(Ifnet() && !fDialOnDemand && Phase() == PPP_DOWN_PHASE) {
 		UnregisterInterface();
+		Delete();
+	}
 }
 
 
 bool
 PPPInterface::Up()
 {
-	// ToDo:
-	// instead of waiting for state change we should wait until
-	// all retries are done
-	
-	if(!InitCheck() || Phase() != PPP_DOWN_PHASE)
+	if(!InitCheck() || Phase() == PPP_TERMINATION_PHASE)
 		return false;
 	
 	if(IsUp())
 		return true;
 	
-	// TODO:
-	// Add one-time connection report request and wait
-	// for results. If we lost the connection we should
-	// consider redialing.
+	ppp_report_packet report;
+	thread_id me = find_thread(NULL), sender;
+	
+	// one thread has to do the real task while all other threads are observers
+	fLock.Lock();
+	if(fUpThread == -1)
+		fUpThread = me;
+	
+	fReportManager.EnableReports(PPP_CONNECTION_REPORT, me, PPP_WAIT_FOR_REPLY);
+	fLock.Unlock();
+	
+	if(me != fUpThread) {
+		// I am an observer
+		while(true) {
+			if(IsUp()) {
+				fReportManager.DisableReports(PPP_CONNECTION_REPORT, me);
+				return true;
+			}
+			
+			if(receive_data(&sender, &report, sizeof(report)) != PPP_REPORT_CODE) {
+				fReportManager.DisableReports(PPP_CONNECTION_REPORT, me);
+				return true;
+			}
+			
+			if(IsUp()) {
+				PPP_REPLY(sender, B_OK);
+				fReportManager.DisableReports(PPP_CONNECTION_REPORT, me);
+				return true;
+			}
+			
+			if(report.type != PPP_CONNECTION_REPORT) {
+				PPP_REPLY(sender, B_OK);
+				fReportManager.DisableReports(PPP_CONNECTION_REPORT, me);
+			}
+			
+			if(report.code == PPP_GOING_UP) {
+				PPP_REPLY(sender, B_OK);
+				continue;
+			} else if(report.code == PPP_UP_SUCCESSFUL) {
+				PPP_REPLY(sender, B_OK);
+				fReportManager.DisableReports(PPP_CONNECTION_REPORT, me);
+				return true;
+			} else if(report.code == PPP_DOWN_SUCCESSFUL
+					|| report.code == PPP_UP_ABORTED) {
+				PPP_REPLY(sender, B_OK);
+				fReportManager.DisableReports(PPP_CONNECTION_REPORT, me);
+				return false;
+			} else if(report.code == PPP_UP_FAILED) {
+				// TODO:
+				// if maximum number of retries is reached we return false
+				// otherwise we wait for the next dial-attempt
+			} else if(report.code == PPP_AUTHENTICATION_FAILED) {
+				PPP_REPLY(sender, B_OK);
+				fReportManager.DisableReports(PPP_CONNECTION_REPORT, me);
+				return false;
+			} else if(report.code == PPP_CONNECTION_LOST) {
+				// TODO:
+				// if autoredial is enabled wait for redial attemts (just continue)
+			}
+		}
+	} else {
+		// I am the thread for the real task
+		while(true) {
+			
+		}
+	}
 	
 	return false;
 }
diff --git a/src/tests/kits/net/ppp/src/KPPPReportManager.cpp b/src/tests/kits/net/ppp/src/KPPPReportManager.cpp
index 0ccb69d278..b44e760cb9 100644
--- a/src/tests/kits/net/ppp/src/KPPPReportManager.cpp
+++ b/src/tests/kits/net/ppp/src/KPPPReportManager.cpp
@@ -82,7 +82,7 @@ PPPReportManager::Report(PPP_REPORT_TYPE type, int32 code, void *data, int32 len
 	for(int32 index = 0; index < fReportRequests.CountItems(); index++) {
 		ppp_report_request& request = fReportRequests.ItemAt(index);
 		
-		result = send_data_with_timeout(request.port, PPP_REPORT_CODE, &report,
+		result = send_data_with_timeout(request.thread, PPP_REPORT_CODE, &report,
 			sizeof(report), PPP_REPORT_TIMEOUT);
 		
 		if(result == B_BAD_THREAD_ID || result == B_NO_MEMORY) {
@@ -91,10 +91,21 @@ PPPReportManager::Report(PPP_REPORT_TYPE type, int32 code, void *data, int32 len
 			continue;
 		} else if(result == B_OK) {
 			if(request.flags & PPP_WAIT_FOR_REPLY) {
-				result = receive_data_with_timeout(fPort, &code, NULL, 0,
-					PPP_REPORT_TIMEOUT);
+				if(request.flags & PPP_NO_REPLY_TIMEOUT) {
+					sender = -1;
+					while(sender != request.thread)
+						code = receive_data(&sender, NULL, 0);
+					result = B_OK;
+				} else {
+					sender = -1;
+					result = B_OK;
+					while(sender != request.thread && result == B_OK)
+						result = receive_data_with_timeout(&sender, &code, NULL, 0,
+							PPP_REPORT_TIMEOUT);
+				}
+				
 				if(result == B_OK && code != B_OK)
-					successful = false;
+					acceptable = false;
 			}
 		}
 		
diff --git a/src/tests/kits/net/ppp/src/KPPPStateMachine.cpp b/src/tests/kits/net/ppp/src/KPPPStateMachine.cpp
index cecea663b7..f0319697dd 100644
--- a/src/tests/kits/net/ppp/src/KPPPStateMachine.cpp
+++ b/src/tests/kits/net/ppp/src/KPPPStateMachine.cpp
@@ -2,7 +2,11 @@
 
 
 // TODO:
-// do not forget to reset authentication status when needed
+// do not forget to reset authentication status when:
+// - connection is lost
+// - reconfiguring?
+// - terminating
+// - ...
 
 PPPStateMachine::PPPStateMachine(PPPInterface& interface)
 	: fInterface(&interface), fPhase(PPP_DOWN_PHASE),
@@ -49,8 +53,16 @@ PPPStateMachine::NewPhase(PPP_PHASE next)
 {
 	// Report a down event to parent if we are not usable anymore.
 	// The report threads get their notification later.
-	if(Phase() == PPP_ESTABLISHED_PHASE && Interface()->Parent())
-		Interface()->Parent()->StateMachine().DownEvent(Interface());
+	if(Phase() == PPP_ESTABLISHED_PHASE && next != Phase()) {
+		if(Interface()->Ifnet())
+			Interface()->Ifnet()->if_flags &= ~IFF_RUNNING;
+		
+		if(!Interface()->DoesDialOnDemand())
+			Interface()->UnregisterInterface();
+		
+		if(Interface()->Parent())
+			Interface()->Parent()->StateMachine().DownEvent(Interface());
+	}
 	
 	// there is nothing after established phase and nothing before down phase
 	if(next > PPP_ESTABLISHED_PHASE)
@@ -161,13 +173,14 @@ PPPStateMachine::UpEvent(PPPInterface *interface)
 	LockerHelper locker(fLock);
 	
 	if(Phase() <= PPP_TERMINATION_PHASE || State() != PPP_STARTING_STATE) {
-		interface->Down();
+		interface->StateMachine().CloseEvent();
 		return;
 	}
 	
 	NewState(PPP_OPENED_STATE);
 	if(Phase() == PPP_ESTABLISHMENT_PHASE) {
 		NewPhase(PPP_AUTHENTICATION_PHASE);
+		locker.UnlockNow();
 		ThisLayerUp();
 	}
 }
@@ -189,8 +202,10 @@ PPPStateMachine::DownEvent(PPPInterface *interface)
 				++count;
 		}
 		
-		if(count == 0 && Interface()->Ifnet())
-			Interface()->Ifnet()->if_flags &= ~IFF_RUNNING;
+		if(count == 0) {
+			locker.UnlockNow();
+			DownEvent();
+		}
 	}
 }
 
@@ -198,8 +213,8 @@ PPPStateMachine::DownEvent(PPPInterface *interface)
 void
 PPPStateMachine::UpFailedEvent(PPPProtocol *protocol)
 {
-	// All protocols must go up.
-	CloseEvent();
+	if(protocol->Flags() & PPP_NOT_IMPORTANT)
+		CloseEvent();
 }
 
 
@@ -222,8 +237,8 @@ PPPStateMachine::DownEvent(PPPProtocol *protocol)
 void
 PPPStateMachine::UpFailedEvent(PPPEncapsulator *encapsulator)
 {
-	// All encapsulators must go up.
-	CloseEvent();
+	if(encapsulator->Flags() & PPP_NOT_IMPORTANT)
+		CloseEvent();
 }
 
 
@@ -337,9 +352,15 @@ PPPStateMachine::UpEvent()
 				NewState(PPP_CLOSED_STATE);
 				locker.UnlockNow();
 				ThisLayerFinished();
+				
+				return;
 			}
 			
 			// TODO: handle server-up!
+			NewState(PPP_REQ_SENT_STATE);
+			InitializeRestartCount();
+			locker.UnlockNow();
+			SendConfigureRequest();
 		break;
 		
 		case PPP_STARTING_STATE:
@@ -381,7 +402,7 @@ PPPStateMachine::DownEvent()
 		case PPP_STOPPED_STATE:
 			// The RFC says we should reconnect, but our implementation
 			// will only do this if auto-redial is enabled (only clients).
-			NewStatus(PPP_STARTING_STATE);
+			NewState(PPP_STARTING_STATE);
 		break;
 		
 		case PPP_STOPPING_STATE:
@@ -389,7 +410,7 @@ PPPStateMachine::DownEvent()
 		case PPP_ACK_RCVD_STATE:
 		case PPP_ACK_SENT_STATE:
 		case PPP_OPENED_STATE:
-			NewStatus(PPP_STARTING_STATE);
+			NewState(PPP_STARTING_STATE);
 		break;
 		
 		default:
@@ -406,7 +427,9 @@ PPPStateMachine::DownEvent()
 	// maybe we need to redial
 	if(State() == PPP_STARTING_STATE) {
 		if(fAuthentiactionStatus == PPP_AUTHENTICATION_FAILED
-				|| fPeerAuthenticationStatus == PPP_AUTHENTICATION_FAILED)
+				|| fAuthenticationStatus == PPP_AUTHENTICATING
+				|| fPeerAuthenticationStatus == PPP_AUTHENTICATION_FAILED
+				|| fPeerAuthenticationStatus == PPP_AUTHENTICATING)
 			Interface()->Report(PPP_CONNECTION_REPORT, PPP_AUTHENTICATION_FAILED,
 				NULL, 0);
 		else
@@ -421,10 +444,14 @@ PPPStateMachine::DownEvent()
 		if(Interface()->DoesAutoRedial()) {
 			// TODO:
 			// Redial()
-		} else
+		} else if(!Interface()->DoesDialOnDemand())
 			Interface()->Delete();
-	} else
-		Report(PPP_CONNECTION_REPORT, PPP_DOWN_SUCCESSFUL, NULL, 0);
+	} else {
+		Interface()->Report(PPP_CONNECTION_REPORT, PPP_DOWN_SUCCESSFUL, NULL, 0);
+		
+		if(!Interface()->DoesDialOnDemand())
+			Interface()->Delete();
+	}
 }
 
 
@@ -436,11 +463,21 @@ PPPStateMachine::OpenEvent()
 	
 	switch(State()) {
 		case PPP_INITIAL_STATE:
-			NewState(PPP_STARTING_STATE);
+			if(!Interface()->Report(PPP_CONNECTION_REPORT, PPP_GOING_UP, NULL, 0))
+				return;
+			
+			if(Interface()->Mode() == PPP_SERVER_MODE) {
+				NewPhase(PPP_ESTABLISHMENT_PHASE);
+				
+				if(Interface()->Device())
+					Interface()->Device()->Listen();
+			} else
+				NewState(PPP_STARTING_STATE);
+			
 			if(Interface()->IsMultilink() && !Interface()->Parent()) {
 				NewPhase(PPP_ESTABLISHMENT_PHASE);
 				for(int32 i = 0; i < Interface()->CountChildren(); i++)
-					Interface()->ChildAt(i)->Up();
+					Interface()->ChildAt(i)->StateMachine().OpenEvent();
 			} else {
 				locker.UnlockNow();
 				ThisLayerStarted();
@@ -473,12 +510,14 @@ PPPStateMachine::CloseEvent()
 	
 	if(Interface()->IsMultilink() && !Interface()->Parent()) {
 		NewState(PPP_INITIAL_STATE);
-		NewPhase(PPP_DOWN_PHASE);
+		
+		if(Phase() != PPP_DOWN_PHASE)
+			NewPhase(PPP_TERMINATION_PHASE);
 		
 		ThisLayerDown();
 		
 		for(int32 i = 0; i < Interface()->CountChildren(); i++)
-			Interface()->ChildAt(i)->Down();
+			Interface()->ChildAt(i)->StateMachine().CloseEvent();
 		
 		return;
 	}
@@ -1328,7 +1367,7 @@ PPPStateMachine::BringHandlersUp()
 		if(BringPhaseUp() > 0)
 			break;
 		
-		fLock.Lock();
+		LockerHelper locker(fLock);
 		
 		if(Phase() < PPP_AUTHENTICATION_PHASE)
 			return;
@@ -1336,14 +1375,12 @@ PPPStateMachine::BringHandlersUp()
 			if(Interface()->Parent())
 				Interface()->Parent()->StateMachine().UpEvent(Interface());
 			
-			// TODO:
-			// Report(PPP_CONNECTION_REPORT, PPP_UP_SUCCESSFUL, NULL, 0);
 			if(Interface()->Ifnet())
 				Interface()->Ifnet()->if_flags |= IFF_RUNNING;
+			
+			Interface()->Report(PPP_CONNECTION_REPORT, PPP_UP_SUCCESSFUL, NULL, 0);
 		} else
 			NewPhase(Phase() + 1);
-		
-		fLock.Unlock();
 	}
 }