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Wireless LANs (WLANs) are one of the fastest and cheapest ways of providing broadband wireless access (BWA). This year, British Telecom has begun rolling out wireless infrastructure around 12 UK cities. In high densities, we believe interference and channel access control mechanisms are likely to become a major cause of capacity and coverage reduction. Significant efforts are made to improve the spectrum efficiency and enhance the performance of license-exempt broadband wireless systems. The aim of this paper is to gain insight on how the performance can be maximised by using a novel cluster-based channel allocation scheme. The study involves an in-depth technical analysis complimented with detailed analytical and experimental data. Extensive simulations are run in different geographical environments to understand performance results of different channel schemes in increasing device and AP density. Results show a cluster-based channel allocation scheme is extremely efficient, practical and improves system performance significantly by reducing interference.