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Within a restricted area such as a single building, or a small cluster of buildings, high-speed (greater than 1 Mbit/s) data transmission is available at a small fraction of the cost of obtaining comparable longhaul service from a tariffed common carrier. Local area networks use this low-east, high-speed transmission capabality as the basis for a general-purpose data transfer network. There are two basic issues in local area network design. First, how should the hardware realizing the network be organized to provide reliable high-speed communication at minimum cost? With the low cost of the raw transmission capability, care is required to keep the associated hardware costs correspondingly low. Second, what protocols should be used for the operation of the network? While many protocol problems are common to local area networks and long-haul networks such as the ARPANET, new protocols are required to exploit the extended capabilities of local area networks. This paper addresses these two basic issues. It also considers the interconnection of local area networks and long-haul networks and presents a case study which describes in detail the host computer interface hard-ware required for a typical local area network.