What happens when wifi channels overlap?

There are many pages on the web advising the use of wifi channels 1, 6 and 11 only, so that your wifi channels don't overlap.

Obviously this makes sense when you only have your network do deal with, but in most urban areas there are now a plethora of other networks, all using the same channels. In my current location there are about 4 networks on channel 6, and a couple on channel 1.

So my question is: What happens when you get lots of networks on the same channel? Do the intelligently share it? It is better to have two networks on channel 6, or one on channel 5 and one on channel 6?

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There is no "intelligently", if you have 2 networks on the same channel or on channel that overlaps this make interference between signal of different network. If others network are quite far there will be low interference and it will still work almost correctly but if the different network are too close interference will be high and you will get slower throughput and higher packet loss.

It's better to have a network on channel 5 and one on channel 6 than both on the same channel, this will reduce interference

Usage of channel 1, 6, 11 and 14 (14 is not allowed in most countries) or 2, 7, 12 or 3, 8, 13 or 4, 9 or 5, 10 guarantee no interference but if you need more channel because of channel used by neighborhood using 3/8 or 4/9 with 1, 6, 11, (14) is "better" than adding 5/10 or 2/7

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It is not entirely accurate to say there is no `intelligently`. Some high-end wifi gear can be setup to automatically adjust its power. –  Zoredache Jun 20 '10 at 18:42
Most wifi gear adjust power, high-end one will be able to adjust power of a whole installation to optimize intelligently. In urban area if your device increases his power, the neighbor one will probably do the same. –  radius Jun 20 '10 at 19:21
While the power level adjusting equipment causes less interference to other network; I'd be care calling it anywhere near intelligent. WiFi purposely does not have any intelligence. If it did, people could "hack" their APs to tell all the surrounding APs to "intelligently" back off, allowing the "hacked AP" network an unfair amount of bandwidth. –  Chris S Jun 21 '10 at 2:17

There are technologies on the market that allow the same wireless channel to be shared intelligently by multiple networks, but these aren't commonplace yet and mostly apply to wireless N networks.

For instance, with multiple antennas, one can use beam forming to reduce (uncontrolled) interference and make better use of the channel capacity. CSMA (Carrier-Sensing Multiple Access) is another technology/technique used to intelligently share a single wireless channel. AFH (Adaptive Frequency-Hopping spectrum) is a related means of channel-sharing that is increasingly employed.

As wireless technology becomes increasingly prevalent, I think we'll see more and better implementation of coexistence technologies (which are already employed in wireless technologies like Bluetooth and especially cellular communication like CDMA and EDGE networks) since there's only a finited radio spectrum and both industry and the public are becoming increasingly dependent on wireless communication.

Edit: Since I originally wrote this answer, Wireless N has since become much more popular, and these technologies are obviously much more widely accessible.

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Isnt csma thought to come into the game when 2 or more networks are sharing the same channel? –  Juan Aug 7 '13 at 21:02

As a general rule with channeled radio communications, which includes wireless networking, it is advisable to leave at least one channel between used channels, where practical. e.g. When radio traffic on two-way radios makes it advisable to change channel you normally go up or down two at a time, rather than just using an adjacent channel. The reason for this is to reduce cross-talk, which results when less than perfect transmitters (read: All transmitters) effectively "spill over" into adjacent channels. Cross-talk effectively reduces you signal strength because the "foreign" signal need to be filtered out. Obviously units using the same channel will suffer worse because the unwanted signal is going to be even stronger.

Rather than listen to some uninformed suggestions to only use channels X, Y and Z, I suggest you determine just what channels are being used in your vicinity and try to use one that's as separated from them as possible. If that cannot be achieved just try and stay away from the strongest signals.

In your case, with nearby system using channels 1,4 and 6, I'd suggest heading over to 8 or 9. Avoid 11 as that appears to be the default for many domestic units, so is quite likely to become used sooner or later.

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First it's a bad idea of using a other channel than 1, 6 or 11. Channel 1 is 22 MHz width so it interferes with channel 2 and 3. See more http://en.wikipedia.org/wiki/List_of_WLAN_channels.

If the channels 1 and 2 are used Carrier sense multiple access with collision avoidance will not be used. To use this the AP must be on the same channel. Now it will interfere with a lot of packet loss.

It's better to set both access point on channel 1, than Carrier sense multiple access with collision avoidance will be used. Now there's a system that regulates which sender may send his packet. See wikipedia link: en.wikipedia.org/wiki/Carrier_sense_multiple_access_with_collision_avoidance and http://www.cisco.com/c/en/us/products/collateral/wireless/aironet-1250-series/design_guide_c07-693245.html#wp9001231.

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