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What is Network LAN? A Guide About Local Area Network

Simply described, a Local Area Network (LAN) is a collection of computers and other devices that are all connected through a network and are all located in the same building, such as a house or business.In most cases, the local area network is owned by a single department or unit. It is simple to design, maintain, and grow, and it has a high level of system flexibility.

The idea of a Local Area Network was developed to find a better way of connectivity within a distinctive area. Later, it evolved as a powerful networking medium, and still, it has significant contributions in networking fields. In addition, LAN is unrivaled in some specific areas, although there many new technologies are available. It is convenient in terms of speed, management, costs, and availability.

What is LAN (Local Area Network)?

According to the fundamental local area network definition, a LAN is a group of devices confined in a small geographic area, such as a small building. But it seems complicated to define the exact points behind a local area network as the small-large concept is very relative and depends on perspective. Simply, devices use LAN to share resources within a specific location.

For example, a company with 10 computers in its office, local area network provides a centralized controlled network for those. The LAN ensures connectivity of all computers over one network.

Moreover, devices like printers and IP phones could be connected to the same local area network, and it can connect the devices through a single communication line or wireless link.

What is The History of LANs?

Universities and research labs first felt the need for a centralized sharing network in the late 1960s as the demand for computers increased. The local area network was not developed overnight; instead, it is an advanced manifestation of its prior network communication technologies.

The first installation of LAN connection was established in 1979 in the electronic voting system for the European Parliament. Earlier in 1970, Lawrence Radiation Laboratory reported the growth of a similar network named 'Octopus'.

Later in 1974, Cambridge University developed Cambridge Ring LAN technology, and within these couple of years, Ethernet and Xerox PARC were developed. Institute of Electrical and Electronics Engineers (IEEE) addressed the Xerox PARC as the standard of LAN communication at that time.

The rapid growth of personal computers using CP/M in the 1970s and later DOS-based systems has changed the networking scenario, and by the 1980s, LAN became the most popular among others.

What is LAN Used For?

At the early ages of LAN, it was only used for sharing storage and printers among connected devices. Later at pace with technological development, it expanded its uses to internet sharing, media streaming, multiplayer gaming, controlling smart devices, and more.

The local area network is used for a secure networking interface that allows password authorization for the different user groups. However, it is used primarily for sharing storage and applications among connected devices.

Storage type local area networks are used as a reliable source of communication for centralized backup systems. Moreover, firewalls and malware protection applications can avoid data comptonization from a local area network when connected to the internet.

Before going further discussion, let's get into the network components and terminologies first-

  • Data- a unit of information that flows across the network
  • Node- the device attached to a network.
  • Client - request services.
  • Server - fulfill services.
  • Peer- it can be a client or a server that shows similar functionality as another. For example- two computers in a network are peers.
  • Network Adaptor- uses to gain access to the network as well as other devices.
  • Hub- is a device that allows hooking multiple devices. It spreads data to every device that has access.
  • Switch - it is similar to the hub but has some different functionality. It is a network utility that connects multiple devices.
  • Router- it is also similar to switch, but it connects multiple switches on separate networks.
  • Media- this is what devices use to connect themselves—for example- cables, wireless technologies.
  • Transport Protocol - it is something that ensures data arrival upon request and is responsible for establishing connection among the devices on a network.
  • Bandwidth - this is the maximum rate of data across the network.

How Does Local Area Network Work?

Local Area Networks work using the following network topologies. For different local area network setups, the network topology diagram is different. Here are the local area network topologies-

  1. Mesh topology

In a mesh topology, infrastructural nodes are interconnected with each other through a dedicated port-to-port link. As it is connected port-to-port, it is secure and doesn't affect the whole network if one link stops working.

Mesh topology

Figure 1. Mesh topology

  1. Star Topology

Star Topology allows connecting all nodes to a central hub. It doesn't allow direct connection between two devices. Instead, devices are needed to communicate through the hub.

Star Topology

Figure 2. Star topology

  1. Bus Topology

In Bus Topology, all devices are connected to the main media through drop lines. A simple utility called Network Tap connects the drop line to the main media.

Bus topology

Figure 3. Bus topology

  1. Ring Topology

In the Ring Topology, each node is connected with two nodes on either side of it. When three and more devices are connected, it forms a ring. When one node wants to transmit data to another node, it sends the data in one direction, and the repeater forwards the request until it is received.

Ring Topology

Figure 4. Ring Topology

  1. Hybrid topology

A combination of two or more topologies is known as hybrid topology. For example, bus topology and star topology together combine as a hybrid topology.

Hybrid Topology

Figure 5. Hybrid Topology

What are The Advantages of a LAN?

The primary purpose of LAN was sharing data among the computers, but it has extended to many benefits. Here go 6 benefits of the local area network.

  1. LAN is more convenient than other network communication technologies. Each LAN user can share and access data from the connected devices easily.
  2. LAN improves productivity because of its fast data sharing capability.
  3. LAN provides a centralized server where all the data is saved in a server, and users can access it by their accounts.
  4. Internet connectivity can be shared through LAN.
  5. Since the data is stored in a local server, it remains secure if it's properly configured. Additionally, it has the option to allow or disallow users.
  6. Maintenance is comparatively easy.

What are The Types of LAN?

Based on the distribution method, Local Area Networks are classified into four types. They are-

  1. Ethernet

Ethernet is a type of LAN where the nodes are connected through the wire media. It can transmit data at a rate of more than 10 megabits per second.

Ethernet network protocol monitors the data transfer over a local area network. In such connectivity, when a device wants to communicate with other devices in the same network or the devices want to share, they first detect the data carrier media. After that, the carrier initiates transmitting data according to its availability.

  1. Token Ring

In a Token Ring LAN connection, nodes are connected in a circular arrangement. It sends data in a specific direction using a token to avoid the collision of data.

IBM, in 1984, introduced the token ring local area network where a ring topology connects nodes.

  1. Token Bus

Another IBM-developed network topology is the Token Bus. In this protocol, tokens are created to manage the access of communication. Any nodes that hold the token can transfer data.

Token Bus is similar to Token Ring topology. Still, in a token ring topology, the ends of the network do not meet each other, whereas the token bus topology allows transmitting data from both ends.

  1. Fiber Distributed Data Interface (FDDI)

In Fiber Distributed Data Interface (FDDI), optical fiber is used as the data transmission medium. However, it is known as CDDI when copper cables are used to connect the nodes.

FDDI is used for long-distance high-volume data transmission. It can communicate up to 200 kilometers at 100 Mbps speed.

What are the Prices for Local Area Network Equipment?

Depending on your requirements and functionality, a local area network equipment set could cost anywhere between $1,000 to $6,000. But the average range of cost is around $3,500. First, let's see what types of equipment and how much labor is needed to install a local area network.

  • Cable dropping

Cable drop is an industrial term that means cabling the hardware network. It covers the cabling from the connection point to the node point. The cost for cable drop depends on the number of drops and the length of cable. Also, the cable cost varies from cable type to type. For example, Coaxial cable costs $0.20-$0.50 per foot. So, for 1,000 feet Coaxial cable, the costs would be $250.

Twisted-pair cable is a bit more expensive than coaxial cable. For twisted-pair cable, dropping would cost $350 for a similar length. Lastly, the optical fiber is the most costly cable, and it is $1- $5 per foot. It would cost around $1,200 for 1,000 feet optical fiber cable.

Again, the price fluctuates from category to category. For example, the basic CAT-1 cable costs $0.20 per foot, whereas CAT-5e, CAT-6, CAT-6a, CAT-7, and CAT-8 cables cost $0.25, $0.35, $0.45, $0.65, and $0.70 respectively.

  • Computer

The network hardware components may be installed in one computer or a system. The cost of a computer will depend on how many nodes are going to be connected to the network. On average, it takes around $1,000 for a computer.

  • Ethernet switch

You'll need network switches for connecting the multiple network devices. Some routers have a built-in switch in them that doesn't require buying additional switches. However, ethernet switches cost $10 - $100 depending on quality and features.

  • RJ45 Jacks

RJ45 Jacks are commonly seen with the ethernet cable. RJ stands for registered jack, and it is installed to ensure uninterrupted cable connectivity among the nodes. The number of jacks will determine the costs of RJ45 jacks. For a medium setup, a $50 budget for RJ45 Jacks would be enough.

  • Network Plates and Plugs

The network will not run without power and connections. Your existing plates and plugs may not be enough for installing a local area network. An additional $25 could be needed to install network plates and plugs for your local area network.

  • Patch Panel

A patch panel and an ethernet switch work almost similarly. Switches route data from the devices to the server, but the patch panel allows the cable to connect the device to the nearest network transport media. A reasonable Solid Bare Copper CAT6 Patch Panel with 24 ports will cost around $200.

  • Modem and Router

The modem allows the network to connect with the internet, and the router shares internet access among the connected devices. For both of these components, it could cost around $250.

  • Service Charge

In addition, the local area network requires network professionals to install. Mostly, it takes 2-4 days to install the whole network. The average labor rate is around $50/per hour for such jobs.

What are the Examples of LAN?

There are many examples of local area networks available around us. Home wifi, small business networks are the most common examples of local area networks.

  • Home Network

A home network allows connecting the devices in the home to the internet and sharing files from one device to another. Usually, a home network connects gaming systems, streaming devices, printers, mobile phones, etc.

  • Office Network

An office network connects the devices needed for office purposes with or without cable. Usually, an office network connects computers, printers, shared storage, and other devices that give access to communicate, collaborate among the connected devices to the employee.

  • Personal Network

A personal network is used for a single user that connects multiple devices of the same owner. For example, many keep their home working network separate from the home network due to security reasons.

  • Storage Network

Storage network is used as a solid interface of storage across multiple devices. Offices where employees need to share a comparatively large amount of data, storage network allows them to store files in the server and share with others.

  • Public Network

Public networks allow connecting devices to access data from a specific host network. Besides, it is used for sharing internet connectivity among people. Hotel and cafes wifi networks are the best examples of public local area networks.

What is the difference between a LAN and a WAN?

A Local Area Network exists in a small and confined area where the Wide Area Network (WAN) exists in many places far away from each other. Consider, you have two local area networks in different places, and a vast distance geographically separates both. Now you need the service provider to join these two local area networks. Here the functionality of WAN has begun.

Commonly, the internet is the one type of WAN but not the only one. Multiprotocol Label Switching is another type of WAN that is used to connect two or more local area networks.

Compared to the data transmission speed, LAN is faster than WAN. The bandwidth and data transfer rate of WAN is also lower than LAN.

LAN uses unshielded/shielded twisted-pair copper cable or fiber optic cable to connect the hardware, but WAN uses leased lines/fiber optic cables or satellites to connect the nodes. However, the LAN shows fewer transmission errors than WAN.

WAN is comparatively costly to set up and maintain, and LAN is more secure than WAN. Moreover, LAN uses peer-to-peer network topology, where WAN uses the client-server model to connect the devices.

The local area network requires hubs and switches to connect other devices into the network. But, the wide-area network needs a router and modem to access the network.

What is the difference between a LAN and a MAN?


MAN stands for Metropolitan Area Network that is confined to a city, town, or metro area. It covers a higher distance from the local area network and a shorter distance from the wide-area network.

The primary difference between LAN and MAN is the size of area and distance they cover. A Metropolitan Area Network typically covers nearly 50 kilometers, where a Local Area Network covers around 1,000 meters.

Data Transmission

LAN uses ethernet cable to transmit data, and often the wireless network is used to connect the nodes among the network. MAN can also be connected through both ethernet and wireless networking media.


LAN is known for high-speed connectivity among devices. On the other hand, MAN is comparatively slow due to the congestion of the network.


Apart from the computer, LAN needs some network components to establish the connection. Network adapter, cable, hubs, repeater, bridge, switch are some of the components that are used for local area networks.

On the contrary, a Metropolitan Area Network requires customers premises equipment (CPE) such as access links, routers to connect the network.

How to Setup a Local Area Network?

Setting up a local area network requires some basic equipment as well as a gradual workflow. It's not necessary to have an internet connection in a local area network, but it is common in most cases. Let's see how to set up a local area network.

Step 1: Gather and assemble the equipment

Before starting the installation, you thoroughly need a network switch or a router, ethernet cable, a computer, and other devices.

Additionally, you'll require an internet connection, modem, and router if you want to connect to the internet.

Assemble all the equipment accordingly and follow the next step-

Step 2: First computer connection

Your network switch, internet connection need to be configured. Connect a computer and configure it with the credentials. It will be required once in the installation process.

For Windows users, go to the Network and Sharing Centre in the control panel. Then go for 'Set up a new connection or network.'

On a Mac operating system, first, go to the System Preferences and then network. Select Built-In Ethernet and go for the advanced option.

Connect the computer following the setup process with the necessary details.

Step 3: Connect other devices.

After finishing the installation, connect other devices with the network. Set access rules and data distribution policy for the connected devices.

Step 4: Internet connection

As mentioned earlier, you'll require internet connectivity from a service provider, a modem, and later a router to connect your network with the internet.

Just plug in this equipment, and you should be able to access the internet.

Step 5: Wifi setup

To connect other devices via wifi, you need to set up your router with your local area network. Connect your router to the network end through cable; this enables the network signal, which is now ready to configure.

Connect a device and go to the router login page (it depends on router variation. Manufacturers provide an IP or link for router administration).

Step 6: Sharing

To share data among the connected devices in a local area network, you need to set certain data forwarding and receiving roles. Most operating systems allow initial management, though you need manual configuration for a comparatively extensive local area network.

In the windows operating system, go to the Network and Internet option from the Control Panel, then Create a homegroup from the Homegroup menu.

Mac users can set their sharing environment from the Sharing preferences option in the System preferences menu.

What is a WLAN?

WLAN stands for Wireless LAN- a type of local area network that connects devices via radio transmission without using wires. Wireless local area networks give the users the ability to move within the area that covers the WLAN.

WLAN is used for reliable communication within a short distance. The connected devices with a wireless local area network can easily access data as well as hardware like IP phones, printers, and scanners. It saves time for installation. However, it reduces the costs of cable dropping and buying multiple hubs and switches.

Apart from these, a wireless local area network has some disadvantages too. Comparatively low data transfer speed is one of them. Reliability and security are great concerns for a WLAN.

What are General Local Area Network Problems and Solutions?

Regardless of how much effort you put into keeping the network running smoothly, problems might arise at any time. Take a look at some common local area network problems and see if they can help you fix the issues.

  1. Duplicate IP Address

The duplicate IP address issue is the most common problem that occurs. When two devices attempt sharing a single IP, the ability to access the network can be interrupted for manual confirmation mistakes.

Why does it happen?

It can happen due to the default Dynamic Host Configuration Protocol (DHCP) configuration of the router. When the router attempts to assign an address for a new device, if another device already occupies the address, you may see 'Address Already in Use.'

Also, this issue happens when a user may assign an IP address that is already being used by another device on the network manually.


Assigning a unique IP address could solve this problem. Moreover, you can take some actions to prevent IP conflicts. Assign DHCP addresses near the top end of the subnet and leave lower addresses available for devices that need static IPs.

  1. IPv4 address exhaustion

IPv4 address exhaustion is the reduction of unallocated IPv4 addresses. When the IPv4 addressing structure fails to provide routable public addresses, you may see IPv4 address exhaustion issues.

Why does it happen?

This could happen when you are running out of the allowed IP addresses from your internet service provider. Or your physical network interface is unable to access the new IPs from ISP.


Purchasing a standalone router could solve the problem. Make sure your router is inoperational with NAT and DHCP. Both prevent IPv4 address exhaustion.

  1. Network Interface Card Error

Network Interface Card (NIC) is another common error that could interrupt your network uses for the users. Usually, the physical network interface is responsible for this error.

Why does it happen?

NIC error could happen due to damaged components and installation errors. If the Network Interface Card is misplaced, you'll not be able to access the network.


Check the Network Interface Card first. Examine the condition, whether it is good, damaged, displaced, or installed in the wrong way. After that, check the cable, hubs, and switches. Hopefully, you will be able to sort out the problem.

  1. No Network Access Problem

Other most frequent and common issues are No Network Access and Limited Access.

Why does it happen?

Network access issues can come forward due to many reasons. Mostly, the failure of internet connection results in No Network Access. It can happen due to misconfiguration of any network components as well as for physical infrastructural errors.


First, check the router configuration and fix it if you find any issues. Then examine the physical network components carefully. Make sure that every component is connected properly. Furthermore, check the network hub, switches as well as router settings if anything goes wrong.