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In TCP/IP networks that comprise relatively few nodes, or in which the network configuration is static (computers do not access the network remotely and the number of hosts doesn't fluctuate), IP address administration is relatively easy. The network administrator simply assigns specific IP addresses to each host.
On large or dynamic networks, however, administering IP addresses can be difficult and time-consuming. To help overcome this problem, Windows 98 supports Dynamic Host Configuration Protocol, or DHCP, which enables a host to automatically obtain an IP address from a DHCP server when the host logs on to the network. When you move a host from one subnet to another on your network, the host automatically receives a new IP address, and its original IP address is released, making it available for other connecting hosts.
By providing dynamic addressing, DHCP enables you to manage a pool of IP addresses for a group of hosts. Assume that your company has 100 employees who often dial into your subnet from remote locations, but not at the same time. At any one time, 25 to 30 remote users might be connected to the network, but your subnet has only 50 available subnet host addresses. If you assign IP addresses manually, you can accommodate only 50 of the remote users. You can't assign the same IP address to 2 users, because if they both connect to the network at the same time, routing problems prevent them from using the network.
Through DHCP, you can allocate a pool of 50 IP addresses to be assigned automatically to the dial-in users. When a user dials in and connects, DHCP assigns its host a unique IP address from the pool. As long as no more than 50 users attempt to log on to the network remotely and acquire IP addresses, you can accommodate all 50 with unique addresses. If the number of users who need to connect exceed the number of available addresses, the only solution is to expand your pool of available addresses or modify the subnet mask to accommodate more than 50 addresses.
DHCP in Windows 98 relies on a Windows NT DHCP server (or hardware-based DHCP server) that can assign IP addresses to hosts on the local subnet when the hosts start Windows 98, and can assign IP addresses to hosts that connect to the network remotely.
In addition to using DHCP, Windows 98 can request an IP address from a PPP (Point-to-Point Protocol) dial-up router. Whether you use DHCP or connect to a PPP dial-up router, you use the same configuration option to configure dynamic address assignment.