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How To Set Up a Home Network
If you have more than one computer in your home, it is quickly discovered what a hassle it is to be shoved aside when someone else needs the printer, which happens to be attached to your PC. You're also probably tired of running up and down the stairs to transfer files using floppy disks. And no one likes fighting over the only computer with Internet access.
There are many more benefits to having a home network, where would you rather answer important e-mail in your home office, hunched over your desk, or in the living room, with your feet up? Better yet, how about out on the veranda?
Over the past few years, a variety of home networking packages have appeared, which are relatively easy to use. You can use your home's existing wiring or in some cases, no wires at all. 
Forewarned is Forearmed
Knowledge of what is available on the market, the pros-and-cons of each device and network plan will help you plan for a more practical solution that will better fit your needs, for instance:
Plan your Topology
What is topology? Wikipedia says "is the study of the arrangement or mapping of the elements (links, nodes, etc.) of a network, especially the physical (real) and logical (virtual) interconnections between nodes".  Exactly where are your cables going to go and how are they going to connect? How many ports on your hub? Do you need a switch added to give you the ability to install extra nodes? How much cable do I need? How many patch panels/cables connectors do you need. You may choose to pre-install a RJ-45 wall jacks in every bedroom, den, and living room in your home, which eventually lead to a central hub, so all you have to do is plug the computer in the wall jack, and plug the hub into the wall jack near it that corresponds with the wall jack the computer is plugged into.
If you have decided to use WiFi how far away are the laptops, printers away from you Wireless Access Point (WAP). The rule of thumb is make sure the distance is no further than the device can transmit and receive. How do you determine this? Over design rather than under design i.e. if you have a two story house, the safest bet would be to place one WAP on each floor if a laptop is going to be used on both floors. There are more scientific ways to achieve this with network scanners and so forth see Wireless Networks however the price of an extra WAP is going to be better than finding out later and having to spend much more on running extra cabling wall jacks and so-on.
Generic Schematic Layout
Figure 1 covers a generic network, many changes can be made according to router IP address, decision to go wirless or composite (WiFi & Wired). Where to purchase a print server, run the printer wirelessly or connected to a PC will all depend on what suits your circumstances best. The most important thing to do is to plan right down to the equipment need before doing anything. It is our hope the diagram will help you to see some possibilities available.
Choose Your Equipment
Make sure that you have the equipment you need. As you're looking for products in stores or on the Internet, you might notice that you can choose equipment that supports three different wireless networking technologies: 802.11a, 802.11b, and 802.11g. 802.11g, offers excellent performance and is compatible with almost everything however, having said that, this technology is changing rapidly so get the fastest just make sure your receivers are compatible and other WiFi equipment are all compatible.
Connect The Router/Wireless
Ready to Go
Configure The Router
By right, only a few settings will need to be changed and this is done by ringing your ISP up or reading their correspondance to input key bits of information needed to connect to the internet. The product are made to plug straight in out of the box with just a few amounts of input. Some ISP's send the router preconfigured which means all you need to do is plug it in. Once you have your network up and running there are a few areas relating to security you need to consider which will be covered below
Security Tips for Home Wi-Fi Networks
Change your router's name and password
This is always the first line of defense. It's easy for attackers to find out what the default name and password are for various manufacturers. Many also default to using the standard 192.168.1 or 2 subnet internally and give the router itself the IP address of 192.168.1.1 or 126.96.36.199. You should make sure you rename the router, assign a strong password for accessing the router configuration software, and consider changing the IP addressing to a difficult-to-guess internal subnet like 192.168.12.1 or 192.168.83.1 (you can use any number from 1 to 254 in the third position in most cases).
Enable infrastructure mode only on all access points and clients on the network. Disable the "ad-hoc" mode, which lets clients set up peer-to-peer networks and could allow rogue users to connect to your network through a legitimate wireless client.
Disable SSID broadcast
The SSID (Service Set Identifier) is essentially the network name for the wireless portion. A wireless access point (AP) or router in open network mode will periodically broadcast a beacon signal (usually about 10 times each second) which announces to the world that the network is live and ready to go. The beacon also includes data such as the signal strength and functional capabilities of the AP as well as the SSID. With broadcasting off, wireless clients must first know the SSID before they can connect.
For home networks, this broadcast information is not necessary. You can simply type in the SSID in your wireless client's setup dialog once, and it will be remembered in future connections. Experienced hackers can still find such "closed" networks, but at least you will not be openly inviting them. And neighbors or passersby will not see or accidentally connect to your network.
Enable WPA (Wi-Fi Protected Access) or WPA2 encryption.
Sound foolproof? Not quite. Even if your SSID isn't broadcast and you restrict access to known MAC addresses, your wireless network may still be detected and compromised. Hackers can capture the wireless data packets as they travel from your access point to your wireless client or vice versa. The captured packets may reveal both the SSID and the MAC addresses of client devices communicating with the network. Once a MAC address is known a malicious user can "spoof" the MAC address of the attacking system to make a computer look like it's one of the accepted systems and allow it to connect. So you should still take additional precautions. Encryption is the next step in the wireless security ladder. WEP (wireless equivalency protocol) is the original Wi-Fi encryption scheme, and comes in several flavors -- 40-, 64-, and 128-bit. However, its underlying algorithm is flawed and subject to relatively easy cracking. Without going into the gory technical details, it can be broken in minutes. If you want to test your WEP connection to see how easy it is to capture packets and decode the key, you can use a tool like AirSnort. The longer 128-bit encryption keys require transmitting more data, but don't offer significantly better protection than 40- or 64-bit encryption, and significantly reduce wireless performance.
While WEP is better than nothing, it will only keep out the neighbors and opportunistic hackers. For true protection, you need WPA or WPA2.
WPA builds on WEP encryption by scrambling the key and integrity-checking it to ensure it hasn't been tampered with. Additionally, it allows authentication using public key infrastructure (PKI) encryption. But the strongest wireless encryption standard is WPA2 (based on the 802.11i security standard). WPA2 is similar to WPA, with the added security of the strong AES or TKIP encryption protocols required by some businesses and government agencies. WPA2 is also the preferred encryption method for the emerging 802.11n standard, and provides the best performance.
Note that WPA and WPA2 require that ALL devices on the wireless net be set to them -- clients, the wireless router or access point, and any other relays or access points in between. If you have some older adapter cards that only support WEP, do upgrade them. (But first check with your manufacturer -- there may be firmware updates for WPA.)
Change Passkey Regularly
No matter which encryption type you use, change your passkey regularly. It takes recording a certain amount of traffic to give crackers enough data to decode a key. Also, passwords do get written down and can fall into the wrong hands.
Wireless Networks - Wikitec