If there are two or more access points within an area, how does a device (e.g. laptop) differentiate the signals that are transmitted from these access points? First, every Wi-Fi device has its own unique MAC address – assigned at the factory but often reconfigurable. For example, a Linksys Wi-Fi AP's 5 GHz radio might have the MAC address 00:25:9C:57:0C:0F. This address is included in every frame sent by that router, so that other...
wireless devices can always tell who sent the frame.
Next, every Wi-Fi network is given its own name, called an Extended Service Set Identifier (ESSID, often shortened to SSID). For example, a dual-band Linksys AP might have two radios, each with their own MAC address but the same SSID NetA. This SSID is included in management frames used to establish wireless connections, including beacons sent by APs to advertise the networks they support and associate requests sent by clients to connect to APs.
Now, suppose that we want to install another AP in the vicinity of NetA, but we want to create a separate network. To accomplish this, we give the new router a different SSID (say, NetB). Clients that connect to NetA still listen for beacons from our old AP, while clients that want to connect to NetB will listen for beacons from our new AP. This is why you should change your AP's default SSID, so that every Linksys in the world doesn't advertise the SSID linksys, resulting in accidental connections.
Alternatively, suppose that we want to extend our own network by installing a second AP. To accomplish that, we give our new AP the same SSID (NetA). Clients still listen for beacons advertising NetA, which are now sent by both APs. Each client picks out the sender's MAC address from the beacon with the strongest signal, using it to address an associate request. An association is thus formed between each client and the "best" AP, even though both APs advertise the same SSID. After associations are formed, the selected AP's MAC address is sent in every data frame, letting the AP know it is responsible for handling those frames. Other APs may hear but will ignore data frames not addressed to them. (Technically, each AP's MAC address is actually called the BSSID – Basic Service Set Identifier.)
Note that there are additional factors that affect AP-client communication. For example, a client listening for beacons sent on 2.4 GHz channels will not hear AP beacons sent on 5 GHz channels, even though both are in the same airspace – both devices must listen to the same frequency to communicate. Furthermore, newer 802.11n devices must operate in mixed mode to let older 802.11g devices make sense of what they hear. Finally, whenever a client tries to associate to an AP, it must satisfy the AP's data rate and security requirements – this is why it's important for all APs advertising the same SSID to have the same supported data rates and security settings. Otherwise, clients may repeatedly try but fail to associate to some APs while successfully connecting to others, resulting in unreliable connectivity.
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