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Due to its simplicity and cost efficiency, wireless local area network (WLAN) enjoys unique advantages in providing high-speed and low-cost wireless services in hot spots and indoor environments. Traditional WLAN medium-access-control (MAC) protocols assume that only one station can transmit at a time: simultaneous transmissions of more than one station cause the destruction of all packets involved. By exploiting recent advances in PHY-layer multiuser detection (MUD) techniques, it is possible for a receiver to receive multiple packets simultaneously. This paper argues that such multipacket reception (MPR) capability can greatly enhance the capacity of future WLANs. In addition, the paper provides the MAC-layer and PHY-layer designs needed to achieve the improved capacity. First, to demonstrate MPR as a powerful capacity-enhancement technique, we prove a "superlinearityrdquo result, which states that the system throughput per unit cost increases as the MPR capability increases. Second, we show that the commonly deployed binary exponential backoff (BEB) algorithm in today's WLAN MAC may not be optimal in an MPR system, and the optimal backoff factor increases with the MPR capability, the number of packets that can be received simultaneously. Third, based on the above insights, we design a joint MAC-PHY layer protocol for an IEEE 802.11-like WLAN that incorporates advanced PHY-layer signal processing techniques to implement MPR.