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We analyze the performance of underwater acoustic ad-hoc networks in the presence of interference. We assume a uniform distribution of nodes over a finite area, and focus for simplicity on a two-dimensional network. The node-to-node channel is modeled using frequency dependent path loss and Ricean fading. We adopt a communication theoretic approach and study the sustainable number of hops through the network as an indicator of the network connectivity, as well as power and bandwidth requirements. The network operation is highly dependent on the node density with two distinct regions of limited performance: the coverage-limited region, where the number of nodes in the network is small, and the interference-limited region, where the number of nodes is large. We show that a desired level of connectivity can be achieved through a judicious selection of the operating frequency, power and bandwidth. Numerical examples illustrate the results of the analysis. These results motivate us to propose a hierarchical underwater acoustic sensor network architecture in which the sensors and the collector stations operate in distinct layers. The hierarchical architecture is supported by the property of the acoustic underwater transmission medium that for each transmission distance there exists an operating frequency for which the narrow-band signal-to-noise ratio is maximized. The sensors and the collector stations are consequently allocated different operating frequencies. We assume a uniform distribution of both sensors and collector stations over the finite area of the sensing field, and model the channel accordingly. The analysis is performed under the assumption that there is interference from other nodes within the same layer of the hierarchy. Numerical examples illustrate the network performance and demonstrate that the preferred operating frequencies ensure network operation without any cross-interference between the collector network and the sensor network.