What Is Local Area Network (LAN)? Definition, Types, Architecture, and Best Practices

A local area network (LAN) is defined as a connected environment spanning one or more buildings – typically in a 1-kilometer radius – that links computing devices within close proximity of each other by using ethernet and Wi-Fi technology. This article discusses the seven key types of LAN and its architectural components, along with our recommendations to streamline LAN implementation. 

What Is a Local Area Network (LAN)?

A local area network (LAN) is a connected environment spanning one or more buildings – typically in a one-kilometer radius – that links computing devices within close proximity of each other by using ethernet and Wi-Fi technology. LAN is among the most foundational components of the global networked landscape, both at consumer and enterprise levels. 

In 1974, Cambridge University developed the Cambridge Ring, which helped connect the computing devices used within the university campus. Xerox came up with an early version of ethernet between 1973 and 1974. The first LAN installation viable at scale was 1979’s electronic voting systems for the European Parliament, where LAN was used to connect 400+ microprocessor-enabled voting terminals. 

Until the 1980s, LAN remained limited to research, education, the public sector, and defense applications. From the 1990s, the rise of affordable PCs and wider accessibility of the internet made LAN implementations more commonplace. Today, nearly every networked location relies on LAN in some way or the other across urban residential areas, office locations, factories, etc. 

In terms of hierarchy, LAN covers more area than a personal area network (PAN), which connects nearby devices using bluetooth or wi-fi, and near-field connectivity (NFC). It is also less expansive than a metropolitan area network (MAN) which covers entire cities and a wide area network (WAN) which connects multiple cities or regions using the same secured line. 

Most leading telecom carriers offer LAN solutions to their consumer and enterprise users to connect their personal and professional devices for daily internet usage. LAN access enables remote collaboration, online shopping, cloud-based media consumption, cloud storage, data exchange from wearables, and a host of other use cases. 

This is why the demand for LAN is constantly growing, despite being a mature market. According to Industry Research, both wired and wireless LAN segments have grown in recent years, particularly in the wake of COVID-19. In Q1 of 2021, revenues in the enterprise segment of wireless LAN grew by 24.6%, as per IDC reports. In other words, LAN continues to be a prominent technology in enterprise stacks, nearly 50 years after it was first developed in the 1970s. 

See More: What Is Broad Network Access? Definition, Key Components, and Best Practices

Types of Local Area Network (LAN)

Local area networks can be classified based on the types of devices they connect, the design of the underlying architecture, and the medium used. There’s also an emerging LAN market that’s native to the cloud era. 

Different Types of LAN

1. Client-server LAN

In a client-server LAN environment, a single server connects to multiple devices known as clients. Client devices cannot interact with each other and a centralized machine handles activities like network traffic management, network access control, etc. This LAN type may be faster in small perimeters, but in a large perimeter, it places too much pressure on the central server. 

2. Peer to peer (P2P) LAN

In a P2P LAN, there is no centralized server, and all connected devices have access to each other, regardless of whether they are servers or clients. The advantage of a P2P LAN is that devices can freely exchange data with one another, making it easier to stream media, send files, and perform similar data exchange activities. On the downside, they tend to be less powerful than client-server LANs. 

3. Token ring LAN

Based on the architecture design, you can classify LANs into a token ring or token bus categories. In the former, all devices are arranged in a ring when they are connected. A token is assigned to every connected device based on its requirements. It was introduced by IBM in 1984 for use in corporate environments when ethernet technology was still in the early stages of development. 

4. Token bus LAN

In a token bus LAN, connected nodes are arranged in a tree-like topology, and tokens are transferred either left or right. Typically, it provides better bandwidth capacities than a token ring LAN environment. 

5. Wired LAN

Wired LAN is probably the most common LAN type in use today. It uses electronic waves to transfer data across optical fiber (or cable variants) instead of tokens. Wired LAN is extremely reliable and can be very fast, depending on the performance of the central server. However, it can hinder portability and flexibility, particularly in environments with no fixed number of devices. 

6. Wireless LAN

Wireless LAN is commonly used in home environments to connect computing devices, wearables, smart appliances, etc. but there is a massive enterprise market for wireless LAN as well, growing by 10.3% year over year as per IDC. This type of LAN uses radiofrequency for data transfers, which can make it susceptible to security risks. It is also battery-intensive and may show fluctuating performance depending on where the wireless device is situated. 

7. Cloud-managed LAN

Cloud-managed LAN  is a specific type of wireless LAN where a centralized cloud platform is used to manage network provisioning, policy enforcement, access control, and other aspects of network performance and security. In a heterogeneous networked environment, cloud-managed LAN streamlines governance, making it a good fit for enterprise use. By 2025, cloud-managed LAN will be worth over $1.18 billion globally, as per research by Market Research Future. 

See More: How SD-WAN Is Simplifying and Accelerating Multi-Cloud Adoption

Key Architectural Components of LAN

Now that we know what a local area network is and its various types let us explore the various architectural components that make up your average LAN environment. 

Key Components of LAN Architecture

1. Public internet

The public internet is what’s being accessed through the LAN. Typically, the centralized server receives data packets from the public internet and access requests from the client devices. It then addresses these requests by enabling data transfer to the various connected nodes through a wired or wireless medium. Technically, a local area network may exist without reaching the public internet – for example, for private data exchange or private intranet hosting use cases. However, internet access is among the top reasons for LAN adoption. 

2. Wired end-user devices

An average LAN environment will have a mix of both wired and wireless devices. Remember that we are talking about end-user devices here, such as laptops, desktops, smart televisions, smart monitors, collaboration hardware, meeting room systems, and the like. These devices will have an ethernet port through which you can plug in the local area network directly into the device itself. Wired end-user devices typically enjoy high-speed internet connectivity, high-quality media streaming, and fast processing. 

3. Mobile end-user devices

Mobile end-user devices refer to devices that you connect using Wi-Fi instead of an ethernet cable. Keep in mind that the same device can double up as both a wired or mobile variant. For example, you may connect a laptop to LAN using the ethernet port on the device or through Wi-Fi, depending on where the device is situated and the performance you need. Wearables, smart home appliances, smart building components, laptops, smartphones, and ruggedized handheld devices fall into this category. 

4. Centralized server

The centralized server is possibly the most crucial component in a LAN environment, particularly for enterprise implementations. Enterprises may purchase or lease servers from vendors like IBM, Cisco, HPE, etc. You can obtain LAN servers from your local telecom carrier as well. Or, you can choose to connect all your devices to one or more modems that are in turn connected to a server situated in a different location. This is typically the case for consumer applications, as there is no cost incurred from housing or maintaining the server. On the other hand, enterprises with LAN servers located on their premises enjoy faster speeds and greater bandwidth capacity. 

5. Network switch(es)

A network switch is an essential component of a local area network. It governs how data packets and network resources are allocated between the devices connected to the centralized server. You can plug in multiple ethernet cables into a multi-port network switch. The switch enforces your network policies so that performance is optimized for every connected end-user device. There are two kinds of switches you can consider for your LAN environment – managed and unmanaged. Managed switches provide you with more control, but unmanaged switches may be cheaper and easier to maintain. 

6. Wi-Fi router

A Wi-Fi router is now a staple component of local area networks as wireless LAN implementations aren’t possible without it. The router is connected to your modem so that it can receive network signals, and it converts it into wireless signals that your mobile end-user devices can process. In recent years, it is common to bundle Wi-Fi routers into the same hardware shell as the modem, as wired-only networks are now increasingly rare. Along with the router, you can deploy accompanying components like Wi-Fi extenders, access points, Wi-Fi amplifiers, and analyzers to boost performance. All of these components are available in both consumer-grade and enterprise-grade variants. 

7. Modem 

A modem is an indispensable component for a local area network as this is what converts the analog signals transmitted via wires and cables into a digital format. Traditional modems are standalone devices where you can plug in the incoming uplink on one end and the outgoing cable on the other. However, there are several modern alternatives to this approach. You can purchase a modem + router device that both converts analog signals into digital and prepares for wireless transmission. You can also combine the network switch with the modem’s functionality. Companies like Cisco and Dell continue to manufacture powerful, standalone cable modems for enterprise use. 

8. Firewall appliance (optional)

A firewall protects end-user devices and servers from network-related security attacks by restricting specific kinds of traffic. Today, most end-user devices ship with built-in firewall software, and you can also download additional software from the internet. Some of the more advanced router systems available in the market also include firewall capability. Optionally, you can choose to implement a hardware firewall appliance as a LAN component. It sits between the router and the network switch or between the switch and the central server to regulate all the data traffic flowing to end-user devices. 

See More: Network Attached Storage (NAS) vs. Cloud Backup: Which Suits Your Organization the Best?

Top 10 Best Practices for Implementing and Managing Local Area Network (LAN)

LAN adoption is a vital step in business growth. It allows you to gain from the latest digital technologies such as online services, cloud-hosted information, and cloud-based process management platforms. Here are 10 best practices to guide LAN implementation and management for business success. 

LAN Management Best Practices

1. Enable WPA3 encryption

WPA2 encryption was the global standard in Wi-Fi security, which is essential given the connection’s risk-prone nature. Since 2006, all enterprise-certified Wi-Fi hardware has used WPA2, with the new WPA3 emerging in 2018. WPA3 improves upon WPA2 by addressing password-related vulnerabilities, securing public Wi-Fi, and making it easier to set up a secure Wi-Fi network. It is advisable for enterprises to transition to WPA3 in the next few quarters, as you will also enjoy backward compatibility with WPA2. 

2. Conduct LAN inventory and implement standardization

As discussed, the average LAN has eight key components, and this number can increase with time. From IP phones, IP cameras, IP speakers, etc., to desktops, printers, access points, and firewall appliances spread out across the office campus, there is a risk of growing clutter as your network environment evolves. Clutter not only makes LAN difficult and expensive to maintain but also causes security vulnerabilities. That’s why you need to conduct a detailed inventory, take stock of network policies and hardware versions, and enforce standardization to simplify governance. 

3. Deploy network redundancy as a failsafe for LAN downtime

Redundancy (or an idle network resource that kicks in, in case of an emergency) is essential for a reliable local area network. LAN connectivity may be disrupted due to inclement weather, problems with the central server’s configurations, security threats, wear and tear, excessive bandwidth demand, and a host of other reasons. Your business must remain connected throughout this period by using a failsafe mechanism. You can set up intermediate routers that enable automatic failover to a different line in case of a disruption. You may also invest in a backup LAN setup from a different carrier to circumvent carrier-related downtime issues. 

4. Carefully consider the physical LAN design

Several vendors now promise plug-and-play LAN solutions, but these may not be the best fit for every scenario. Particularly for business use, every organization requires a local area network tailored for their unique requirements – for example, connecting kiosk PCs in a retail outlet or tablet-based menus in a restaurant. The physical design of your LAN architecture, including the exact positioning of routers, the number and configuration of network switches, and the quality of cables used. 

5. Plan for Internet of Things (IoT) 

There are two types of networks used to connect IoT devices – low power wide area networks (LPWAN) in long ranges and wireless LAN within the same building or up to 100 meters. You may even connect an IoT device using a wired LAN if it has an ethernet port, which is often the case for home appliances like smart TVs or enterprise-grade meeting systems. All of these require a well-articulated blueprint where you take stock of your existing IoT devices and estimate future requirements. You may allocate dedicated network resources via LAN as well as LPWAN, depending on your edge radius. 

6. Explore software-defined LAN or SD-LAN viability

SD-LAN decouples physical network components from the platform from which they are managed. Instead of configuring each individual device for optimized LAN connectivity, SD-LAN uses a centralized platform (typically hosted on the cloud and fed with data wirelessly). SD-LAN has a number of advantages over traditional LAN management. You obtain observability across your entire landscape through a single pane of glass. You can also gain from software-based enablers like network automation code or cloud-delivered updates. Next-gen SD-LAN services like Macquarie Telecom SD-LAN use artificial intelligence (AI) to enable up to 5X faster speeds than even Wi-Fi 5.

7. Consider managed LAN services to reduce in-house efforts

Managed LAN services allow you to offload the maintenance, governance, and security aspects of LAN management to an external provider. Nearly every major telecom carrier globally, including Orange, Verizon, and Vodacom, offer managed LAN to their enterprise clients. You can also partner with technology companies that bring expertise in network device management and modernization. Typically, a managed LAN offering will use a cloud-hosted platform to provide you with visibility and regular insights into LAN operations without having to put in any on-ground efforts. 

8. Adopt LAN segmentation to improve performance

Segmentation allows you to branch a local area network to improve performance and ensure security. Different LAN segments do not have access to each other and gain from dedicated resources assigned to them via the network router and switch. There are two ways to go about this. You can place a physical LAN bridge between the central server and connected devices to create multiple branches. Or, you can use virtual LAN or VLAN technology to use software-defined network policies to isolate your network into groups. 

9. Use a physical firewall appliance in addition to firewall software

Due to the ubiquity of firewall software, consumers and small businesses often make the mistake of not investing in an additional firewall appliance. However, software alone cannot block 100% of your network-related risks and vulnerabilities. Firewall software resides in the same system as all the other applications on your end-user device. This means that if the device is infected or compromised in any way, the firewall software may also stop functioning. An additional firewall appliance regulates data traffic and enforces restrictions from an external node that is almost impossible to hack. 

10. Assign LAN implementation ownership to designated stakeholders

LAN is a key infrastructural pillar of your enterprise and shouldn’t be bundled with the rest of your IT services or network administration duties. You need a designated project manager to look after LAN implementation, and they could belong either to your internal IT team or the managed service provider’s staff. There must be a team of network management professionals to optimize LAN configurations after it is installed. You also need a centralized decision-maker to oversee the project. This capability could draw from a Center of Excellence (CoE) comprising representatives from the various business units that rely on LAN for day-to-day functioning. 

See More: Top 5 Wi-Fi Analyzer Apps to Drive Seamless and High-Speed Connectivity 

Key Takeaway 

Robust LAN infrastructure can provide you with reliable connectivity and support business processes. To achieve this, companies must remember the following key elements: 

• LAN helps connect devices in a 1-kilometer radius (wired) or 100 meters radius (wireless). 
• LAN has seven essential and one optional component for optimized functionality and security.
• Following the LAN best practices we recommended, you can ensure a hassle-free LAN implementation that stands the test of time as your organization evolves. 
• LAN continues to be a dynamic technology space, with the introduction of AI and the cloud, despite being a highly mature market. 

By paying attention to the LAN architecture, users with networked environments of any scale (consumer, SMB, or enterprise) can improve performance, save costs, and minimize security risks. 

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