What is Internet Connection Sharing?

My standard answer to this question is to just bite the bullet and purchase
a broadband router. In fact my earlier article How should I set
up my home network? outlines exactly that setup.

But that's not always practical. For example if all you have is a dial-up
connection to the internet, most routers aren't going to work for you.

That's where something called "Internet Connection Sharing" comes in.

Internet Connection Sharing, or ICS, is exactly what its name implies - a
way for a computer to share its connection to the internet.

The first problem we encounter when setting up ICS is that the computer
whose internet connection we want to share must allow connections to both the
internet, and to the other computers that want to share the
connection. In the case of dial-up, that typically means the computer needs
both a modem or phone connection to connect to the internet, as well as a
network connection to connect to the other computers on a local area network or
LAN. In the case of a broadband connection to the internet that might mean the
computer would actually need two network adapters - one for the internet and
one for the LAN.

So depending on how you connect to the internet, and what network
connections are available on your computer, you might need to purchase
and install a network adapter.

The very simplest use of ICS looks somewhat like this:

Computer A, in the middle, is somehow connected to the internet - possibly
through a dial-up connection.

Computer B's network adapter is connected to the network adapter of Computer
A using a special ethernet cable refereed to as a "cross-over" or "reversing"
cable.

Computer A is configured with ICS enabled. Among other things, that means
that Computer A will assign an IP address to Computer B. All internet requests
made by computer B are routed through computer A and then send on to the
internet, and the data returning follows the same path in reverse.

The down side? There are a couple. The most obvious is that Computer A must
be on and running in order for Computer B to be able to access the internet. If
Computer A crashes, shuts down, or is simply overloaded, it can affect its
ability act as the "middle man" for the other computers attempting to connect
to the internet. In addition, while Computer B is "hidden" behind Computer A,
Computer A is sitting directly on the internet, so it better have the
appropriate firewalls and other internet safety software installed and running
properly.

And of course if you're sharing something as slow as a dial-up connection,
it only gets slower - perhaps much slower - if multiple computers are
attempting to use it at the same time.

Let's look for a second what Computer A is doing in this configuration:

• Computer A assigns IP addresses to the locally connected computers such as
  Computer B

• Computer A performs Network Address Translation (NAT) for all data traveling
  between those local computers and the internet.

• By virtue of NAT, Computer A is acting as a firewall to incoming traffic,
  protecting the local computers.

• Computer A is performing some rudimentary routing - determining if incoming
  traffic is destined for itself, or for other computers on the LAN.

Sounds familiar? It should. With Internet Connection Sharing enabled, a
computer takes on many of the roles of a traditional low-end router.

So what if we want to connect more than one computer? Add a hub to the
mix:

The hub simply acts as a way to connect multiple computers to the shared
port on the ICS-enabled Computer A.

And of course, if you're going to buy a hub anyway, then if at all possible
I'd recommend purchasing a router instead, configuring your LAN
"normally", and avoiding the limitations of ICS all together.

If ICS looks to be the appropriate solution for you, rather than duplicate
the configuration here I'll point you at this article: Setting up Internet Connection Sharing which has step by
step instructions.