interface virtual-template 1

   encapsulation ppp
   ip address x.x.x.x 255.255.255.0

 interface atm 3/0

   no ip address
   pvc 0/100
   encapsulation aal5ciscoppp virtual-template 1

The following are the four different PVC encapsulation types:

aal5ciscoppp: For Cisco's proprietary PPP over ATM, aal5ciscoppp supports only Cisco routers with ATM or asymmetric digital subscriber line (ADSL) interfaces. Use this type of encapsulation when PPP authentication is desired.

aal5mux: AAL5 MUX encapsulation supports only a single protocol (IP or IPX) per PVC.

aal5nlpid: AAL5 Network Layer Protocol Identification (NLPID) encapsulation allows ATM interfaces to interoperate with High-Speed Serial Interfaces (HSSIs) that are using an ATM data service unit (ADSU) and running ATM-Data Exchange Interface (DXI).

aal5snap: AAL5 Logical Link Control/Subnetwork Access Protocol (LLC/SNAP) encapsulation supports Inverse ARP and incorporates the LLC/SNAP that precedes the protocol datagram. This allows the multiple protocols to transverse the same PVC.

Note: aal5snap is the default encapsulation and the most widely used because it allows multiple protocols to be carried over one PVC.

 interface virtual-template 1
   encapsulation ppp
   ip address x.x.x.x 255.255.255.0
 !
 interface atm 3/0
   no ip address
 interface atm3/0.1 point-to-point
 !
   pvc 0/100
   encapsulation aal5snap 
   protocol ppp virtual-template 1

 interface dialer 0
   encapsulation ppp
   ip address x.x.x.x 255.255.255.0
   dialer pool 1
 !
 interface atm 3/0
   no ip address
 !
 interface atm3/0.1 point-to-point
   pvc 0/100
   encapsulation aal5snap 
   protocol ppp dialer
   dialer pool-member 1

(on how to determine which way to use if the topic happens on the lab)

It depends on how the backbone router is configured.

If it is configured with encapsulation aal5ciscoppp, then the first is the way to go (I would use a point-to-point subinterface if possible).

If it is configured with encapsulation aal5snap, then both of the ways I mentioned will work. The only difference is that with the dialer approach you can ping your local interface, and with the virtual template you cannot. I learned that with the IE book.

As for the encapsulation used by the backbone router, either it is mentioned or suggested in the task, or the proctor will tell you if you ask, or trial and error ;)

http://www.cisco.com/univercd/cc/td/doc/product/software/ios122/122cgcr/fqos_c/fqcprt6/qcflfifr.htm
sean@ertw.com

Slightly off the topic, but includes the following sections:
# Configuring PPP over ATM
# Configuring PPPoE over ATM
# Configuring PPPoE over Ethernet
# Configuring PPPoE over IEEE 802.1Q VLANs
# Configuring RADIUS Port Identification for PPP
# Configuring ATM Routed Bridge Encapsulation
# Configuring an ATM PVC Range
# Configuration Examples