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With the dramatic price drop in computers over the past few years, and the advent of wireless service, now is the optimal time for the home user to create their own network. A home network has many advantages including sharing of files, printers and other resources. Home networks are fairly easy to set up.
What do you need to create your own home network?
Two or more computers
A router, either wired or wireless. Routers do what their name suggests, they route signals (information) from one source to another. In a network they can route internet access to multiple computers, enable wireless printers and communicate with other wireless devices, like an IPod touch.
An Internet connection. While an internet connection is not necessary to network computers/printers it is a consideration to share WEB access with multiple computers from one source.
A modem is the piece of hardware that receives information from your Network service provider. Again, not necessary for a Network. A modem is used regardless of your type of Internet connection; high speed cable, DSL (digital subscriber line) or wireless. You can share Internet connectivity with a dialup modem, however it is slow.
Microsoft ® officers Home Networking Server software. This software when installed on a server (a dedicated computer you don't actually "use") allows all user files (photos, documents, etc) to be stored on the server for easy access by the other computers in the home network.
Wireless: if you are going with a wireless network, it does not require any cable running, hole drilling, etc, network interface cards (NIC) can be added to older desktop or laptop computers. Most new laptops come with a built in wireless NIC while most desktops, new or old, do not. Wireless cards can be added to any desktop computer.

