Networking Basics: Network addressing

Applies To: Windows SBS 2008

Internet vs. local area network

When a group of computers are connected together within a relatively small area, it is referred to as a local area network (LAN). If a LAN is available only to certain people (such as employees of a company), it is called a private or internal network. The Internet is a public network because it is accessible to many users and computers from different networks. The network shown in Figure 6 is a LAN that can be used to connect to the Internet.

You can help to physically secure your small business LAN by configuring your hardware or software so that the router acts as a gateway to the Internet. A gateway is a combination of hardware and software that connects two different types of networks, for example a private network and a public network. There must be at least two network adapters installed on a gateway, one to connect to the Internet (ISP network adapter) and the other to connect to the private or local network (local network adapter), as shown in Figure 6.

Public vs. private addressing

An IP address is a unique numerical value that is used to identify a computer on a network. There are two kinds of IP addresses, public (also called globally unique IP addresses) and private.

  • Public IP addresses are assigned by the Internet Assigned Numbers Authority (IANA). The addresses are guaranteed to be globally unique and reachable on the Internet. This assures that multiple computers do not have the same IP address.

    An Internet service provider (ISP) obtains a range of public IP addresses from IANA, and then the ISP assigns the addresses to customers to use when they connect to the Internet through the ISP.

    Public IP addresses are routable on the Internet, which means that a computer with a public IP address is visible to other computers on the Internet.

  • Private IP addresses cannot be used on the Internet. IANA has set aside three blocks of IP addresses that cannot be used on the global Internet. These three blocks of addresses are private IP addresses, and they are used for networks that do not directly connect to the Internet.

    A private IP address is within one of the following blocks or range of addresses:

    • This block allows valid IP addresses within the range to

    • This block allows valid IP addresses within the range to

    • This block allows valid IP addresses within the range to

    For more information about private IP addresses, see RFC 1918, "Address Allocation for Private Internets," at

Most small businesses prefer to use private IP addresses for the local network, because ISPs generally charge a fee for each public IP address that the small business uses. As a result, using public IP addresses on a local network is costly. Rather than purchasing a globally unique IP address for each client computer that is on your local network, you can purchase one globally unique IP address and use it for the router interface that connects to your ISP.

In most cases, a private IP address of,, or for the local network is recommended during Windows SBS 2008 installation.

IPv4 vs. IPv6 addresses

Windows SBS 2008 requires an IPv4 address, but it also supports IPv6 addresses when they are used on the same network.


The version of the Internet Protocol (IP) that is commonly used is version 4 (IPv4), which has not changed substantially since RFC 791 was published in 1981. IPv4 is robust, easily implemented, interoperable, and capable of scaling to a global utility that can function with the Internet.

The Internet continues to grow exponentially, and the adoption of broadband technologies, such as cable modems, mobile information appliances, such as personal data assistants or PDAs, and cellular phones, means that many more addresses are needed.


IPv6 significantly increases the number of addresses that are available. The most obvious difference between IPv6 and IPv4 is the size of the addresses. An IPv4 address is 32 bits long, and an IPv6 address is 128 bits long, which is four times longer than an IPv4 address.

Dynamic vs. static IP addresses

A local area network can have static and dynamic IP addresses. To configure a network that is easy to support, configure all client computers to obtain an IP address from the Dynamic Host Configuration Protocol (DHCP) Server service that is in Windows SBS 2008.

Dynamic IP addresses

Dynamic IP addresses are acquired from a DHCP server, and they may change from time to time. You can provide dynamic IP addresses to the computers on your network by configuring one or more DHCP servers. The DHCP server must be assigned a static IP address.

Static IP addresses

A static IP address does not change. It is assigned by the network administrator, and it is manually entered into the properties for the network adapter that is on a server or on a client computer. A static IP address does not require that a DHCP server is running on the network.

Certain types of servers must have a static IP address. These servers include DHCP servers, DNS servers, WINS servers, and any server that is providing access to users who are using the Internet. If the computer has more than one network adapter, you must assign a separate static IP address for each adapter.