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What Is a Local Area Network? LAN Definition, History and Examples

Ethernet cable plugged into a UniFi switch port

A local area network (LAN) consists of a series of computers linked together to form a network in a circumscribed location. The computers in a LAN connect to each other via TCP/IP ethernet or Wi-Fi. A LAN is normally exclusive to an organization, such as a school, office, association or church.

History of LAN

LAN began in the ether. Not the 19th century concept of a mysterious, invisible medium between the sun and the Earth that conducts light — that’s Aether; however, it’s not far off to think about LAN and Aether in the same context.

Here’s a timeline that will tell you why:

1973: Birth of the Ethernet

Dr. Robert M. Metcalfe invented the Ethernet in 1973. His job was to network all the computers in a building to each other and to the world’s first Xerox laser printer. In a memo, he named the networking method “Ethernet” because the huge coaxial cable that would connect the computers to each other reminded him of the Aether concept.

Metcalfe’s idea was informed by ARPANET — the original internet developed by the U.S. Department of Defense— and the ALOHAnet, which was a packet-switching wireless radio network for computers developed by the University of Hawaii.

The Ethernet allowed computers to send packets of data through a coaxial cable to communicate with each other and the printer. It employed a collision-detection scheme. If nodes in the network fired at the same time, causing a collision, the mainframe wouldn’t respond and the nodes would then wait a random number of milliseconds to fire again. 

1977: First commercial LAN

Four years later, Datapoint Corp. installed the first commercial LAN at Chase Manhattan Bank in New York. Unlike Metcalfe’s Ethernet, Datapoint’s LAN used the Attached Resource Computer (ARC) network. While Ethernet employed collision-detection, ARC employed a token-passing scheme to avoid simultaneous transmissions by nodes. In other words, the nodes took turns transmitting signals instead of relying on random retransmission. Other companies, such as IBM, adopted the token-passing scheme to battle Ethernet for LAN supremacy throughout the ‘80s.

1979: Ethernet available to the public

Metcalfe started 3Com to develop and sell Ethernet products.

1985: IEEE becomes the standard for LAN

Ethernet became the Institute of Electrical and Electronics Engineers’ (IEEE) standard for LAN.

1990: Ethernet wins over LAN

Ethernet had won the LAN battle, in part by switching to a twisted pair cable, which reduces crosstalk and electromagnetic induction. In other words, Ethernet was faster. 

1991: Work begins on wireless LAN

The IEEE started working on wireless LAN (WLAN), which is based on the ALOHAnet prototype.

1997: Wi-Fi is born

IEEE released the 802.11 (Wi-Fi) standard.

Instead of collision-detection, Wi-Fi employs a wait-and-see carrier sense multiple access/collision avoidance (CSMA/CA) scheme. A Wi-Fi device listens to radio waves broadcast by the LAN for a random amount of time, and when the network is idle, the device transmits a signal (frame). When the receiver gets the frame intact, it sends back an acknowledgement (ACK) to the sender. Wireless LANs (WLANs) and LANs can access the internet or wide area networks (WANs) through a gateway

Difference Between LAN and WAN

A wide area network (WAN) is a series of LANs linked together to form a network in an extended area. WANs are typically operated by telecommunications companies or businesses that need a network comprising multiple remote locations. The internet itself is a WAN.

Fiber optic cable is the preferred transmission medium for WANs because fiber optic can transmit large amounts of data at high speeds. As is the case with the internet, a WAN can also include metropolitan area networks (MANs).

LAN Server

A LAN server, or file server, is a specialized, high-speed computer that houses the application programs and files for computers on a network. A network administrator grants user access to apps and files on a LAN server. LAN users can download apps and files to access them directly from the hard drive of their device.

LAN vs. Wi-Fi

Today, asking whether you should use a LAN Ethernet connection or a Wi-Fi connection is like asking whether you want consistency or convenience. Gigabit Ethernet is capable of consistently transmitting data at speeds of 1000 Mbps and Fast Ethernet can handle 100 Mbps. In comparison, the newest Wi-Fi standards operate as follows:

  • 802.11ah: Operates on frequency bandwidths below 1GHz, meaning it’s capable of longer distance transmission than other standards. The top speed for 802.11ah is 347Mbps.
  • 802.11ad: Operates on a bandwidth of 60GHz at speeds up to 6.7Gbps — very fast, but only works up to 11 feet away from the access hub.
  • 802.1ac (Wi-Fi 5): Operates on a bandwidth of 5 GHz or 2.4 GHz, depending on the router, with speeds up to 3.46Gbps.

The latter two standards are a great deal faster than Gigabit Ethernet, but Lifewire’s Bradley Mitchell contends that these theoretical Wi-Fi speeds do not match up with the actual speeds you’ll experience. Still, WLANs allow you to move around conveniently with laptops and smartphones in the area. You won’t experience the consistent speed of Ethernet, but you will get fairly high speeds and convenience with today’s technology.

LAN Example: Components Necessary for a LAN Connection

To build a LAN or WLAN, you need the following:

  • Computers with Interface Cards: Most modern PCs, laptops and tablets come with a network interface card (NIC) for Ethernet and one for Wi-Fi. This allows the machine to connect to a network. The NIC should come with driver software that the operating system automatically configures and updates.
  • Cables: Unshielded Twisted Pair (UTP) cables are the standard (CatX cables, where X is a number that indicates the speed a cable will fetch). If you’re looking for insanely fast speeds, fiber optic cables are the (expensive) ticket.
  • Switches and Hubs: You’ll run cables to boxes containing switches and a hub (or more than one hub for a larger network). Plenty of LANs use both switches and hubs. A hub divides up and shares data packet transmission with all the computers on a LAN, while switches dedicate packet transmission to a single computer, which reduces network traffic.
  • Routers: Network routers allow you to connect to other LANs (if need be), and they assign IP addresses to your devices. A wireless router will allow computers with Wi-Fi NICs to connect with each other and with the internet.
  • Modem: If you’re going to connect a LAN to other LANs and to the internet to form a WAN, a modem facilitates signal conversion and reversion.
  • Software: Network software should come with your operating system of choice, but you’ll also need to download security software.
  • Dynamic Host Configuration Protocol (DHCP) Server: You’ll need a PC with plenty of RAM and hard drive space to act as your DHCP server.

Setting up a LAN, WLAN or WAN can be very complex depending on the size of the organization. Preparing for and earning an IT certification like CompTIA Network+ will prove to employers you have the skills needed to administer computer networks.

CompTIA Network+ covers computer networking topics including setting up LANs. Download the exam objectives to see all the topics covered by this IT certification.


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