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I am curious, whther a WLAN repeater needs to know about network encryption? It works on the 1st level of OSI Model - why does TP-Link write here that only WEP is supported?

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What makes you think a wireless repeater is a level 1 device? It's not a hub that emits received data to all other connected clients. It is in fact operating at layer 2 (MAC addresses). In order to relay traffic it needs to be connected to another wireless accesspoint and accept new wireless clients, therefore requiring support for the encryption in use.

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