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A local area network (LAN) is a small network of devices in close proximity and directly connected to one another either with cables or Wi-Fi, while a wide area network (WAN) is network of dispersed devices or LANs connected across vast distances through global telecommunications technologies. A home or small office network is a common example of a LAN, while the internet is often cited as the world’s largest WAN.

Local Area Network (LAN): A LAN is a network of devices interconnected by a common communications line. These devices are located in close proximity to each other and are usually housed in the same building or office complex. The LAN allows devices to share resources like files, printers, or apps while also facilitating communication between them. Unlike a WAN, it is easy to set up a LAN.

Wide Area Network (WAN): A WAN is a telecommunications network that connects devices spanning multiple locations spread across the globe. For instance, businesses with locations in diverse places use WANs to connect to their branch offices, enabling their employees to access resources from any location. WANs use satellite links, leased lines, multiprotocol label switching (MPLS), and other communication technologies for secure data transfer between devices.

LAN vs. WAN comparison chart

Here is a quick side-by-side comparison of LAN and WAN to better display their basic differences:

LAN WAN
Full name Local Area Network Wide Area Network
Network size Small Large
Transfer speed Fast and consistent Slower and subject to fluctuation
Congestion Unlikely May experience congestion
Age of technology Older Recent
Owner Owned by a specific organization and managed in-house Typically leased from a third-party provider
Ease of maintenance Easy Complex
Area of use Localized to a small area, like an office or college campus Connects users located in geographically diverse locations
Scalability Not scalable beyond network perimeter Highly scalable
Transmission medium Ethernet cables or Wi-Fi Uses satellite links and the cloud to connect users

How do LANs and WANs work?

LANs and WANs function very differently from one another, using different protocols and management models to achieve essentially the same function: sending and receiving data packets between users on different devices.

A laptop, mobile phone and tablet floating around a router.
Source: Pixabay

How local area networks work

A LAN provides shared access to computing devices located near each other. Data on a LAN is commonly transmitted through peer-to-peer communication (directly between devices) or client-server communication (devices connecting to a central server). LANs use network protocols like Ethernet to transmit data between devices.

The following three topologies are used for transmitting data in LANs:

  • Bus topology: In bus topology, devices are connected to a single cable. Data is transmitted along the cable, and if the destination address matches the enclosed address, the data is allowed to pass through.
  • Star topology: The star topology is a networking setup where multiple workstations are connected to a central hub, forming a star-shaped network. If a particular device on the network wants to communicate with another workstation, it must first send the data through the central hub. This topology is the most commonly used setup in local area networks.
  • Ring topology: In a ring topology, devices are connected in a circular manner, and data passes around the ring until it reaches its destination. There is no central console.

When a device on the LAN sends information to another device, it first breaks down the data into packets. These packets contain source and destination addresses. The source device sends the packet, and with the help of switches and routers, the packet is forwarded to the destination device.

Infographic that shows nodes of cloud teck, desktops, mobile phones and tablets forming a network
Source: Pixabay

How wide area networks work

Due to their geographical size, WANs are usually owned and managed by a service provider such as MPLS, satellite services, Virtual Private LAN Services (VPLS), or cable companies that help in long-distance communication and data transmission.

The infrastructure components used in a WAN include switches; routers; transmission lines like fiber optic cables, satellite links, and wireless connections; and a range of other networking equipment.

WANs transmit data either through point-to-point (P2P) connections or shared circuits using packet-switching. In P2P connections, packets sent from one point are delivered to the other using Layer 2 of the OSI model. P2P connections are also known as circuit-switched networks, private lines, or leased lines.

A more modern approach is packet switching technology, where data does not rely on any physical connection between nodes but is broken down into small manageable packets. Each packet is assigned a source address and a destination address. Then depending on the traffic, the data is allowed to take any path to reach the destination, as opposed to being limited to a predetermined route.

Main differences between LANs and WANs

Despite the similarity of their names, LANs and WANs differ on most points, including size, connections, cost, security, and speed.

  • Size: The primary difference between LANs and WANs is that LANs serve a small geographic area confined to a physical space, while WANs cover diverse geographical areas sometimes spanning across countries.
  • Single point of failure: In LANs, it is common to have a single point of failure, and in case it goes down, there is a high probability that the entire network will be affected. WANs have no single point (other than the service provider itself), and seldom if ever go down entirely.
  • Connections: LANs use local connections like Ethernet cables while WANs use MPLS, leased lines, and VPLS.
  • Cost-effectiveness: LANs are significantly cheaper than WANs to set up and operate. Hence, they are more cost-effective — at least until you need to scale beyond their capacity.
  • Security: LANs are more secure than WANs as they are restricted to a known area that firewalls and other security devices can protect.
  • Speed: LANs are faster as they cover a short distance and experience less congestion. In contrast, WANs can sometimes get congested due to traffic surges.

Main Similarities between LANs and WANs

LANs and WANs do have some things in common, namely their basic components and purpose.

  • Collaboration: Both LAN and WAN allow for the sharing of resources among users.
  • Components: Both use networking components like routers, switches, and cables to transmit data.
  • Communications: Both use standard communication protocols to send information from one device to another.
  • Packets: In both, data is broken down into packets containing source and destination addresses.
  • Data protection: Both employ security measures to protect data at rest and transit.
  • Addressing: Both assign addresses to identify devices on the network.

When to use LANs vs. WANs

Unsurprisingly for such different technologies, LANs and WANs have very different use cases.

LAN use cases

LANs are an excellent tool for creating secure connections between devices located close to each other. Here are some use cases where LANs prove to be incredibly useful:

  • Families: Families can link multiple devices at home to a single internet connection. They can also share printers over the LAN, improving costs.
  • Offices: Implementing LANs in an office environment allows colleagues to collaborate on projects in real time and access shared resources like printers, files, internet connections, drives, and other resources.
  • Businesses: Brick-and-mortar businesses can store and backup data centrally on the LAN. This data is updated regularly and can be accessed by authorized users.  
  • Manufacturing: Through the use of LANs, industrial machines can be connected to control systems, which help to enable remote monitoring of manufacturing processes.
  • Collaboration and esports: One of the benefits of LANs is that they enable software sharing among users connected to the same network.

WAN use cases

WANs are the go-to option anytime an organization needs to extend connectivity outside of a limited area. Here are some examples where you might need a WAN connection:

  • International, hybrid, or remote workforces: WAN can help businesses communicate with geographically dispersed offices and allow team members to access shared corporate assets.
  • Cloud: WANs enable companies to connect to cloud apps and infrastructure.
  • External resources: WAN administrators can grant permission for third parties to access internal resources of a business.
  • Warehouses: Logistics companies can use WANs to monitor processes and track inventory.
  • Universities: Educational institutions use WANs to support online learning activities.
  • Ecommerce: Retailers use WANs to process transactions and manage workloads.

Bottom line: Do you need a LAN or WAN for your network?

Organizations need to choose the right enterprise network solution when it comes to sharing information across different devices or locations. Examining your business needs will help you make the right decision when selecting a LAN versus a WAN.

If you’re a small office and your business requirements are restricted to a particular workplace, you should choose a LAN. In contrast, a WAN is the ideal network for you if you are a large corporate organization with offices located in different cities or even countries.

If you have small, local network needs, here are the top enterprise LAN providers to get you set up. For bigger, more dispersed needs, here are the best SD-WAN providers to manage your network.

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