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My daughter is now away from home in a boarding college and attending uni. She has internet in her room (cat5 cable). Can I set up a wireless router to this cable so that she can use her devices remotely? and if so what settings do I need to use? I have an older Dlink 524UP that I could use, would this be suitable and how would I set it up?

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Yes, it can be done. E.g. my Linksys WRT54g has 5 RJ jacks, one for "Internet" and 4 local. It is a router, so it offers a local net with addresses for private use.

Just make sure that the WiFi router is configured so it doesn't try to take the same private network they use in the room, and check for other WiFi routers/access points nearby, so it doesn't take a crowded channel. Also clone the MAC of whatever PC was registered for the network (if any). The manual for your router should explain most of this in a step-by-step manner.

It is probably a good idea to ask the network people at the Uni to make sure this is allowed, and perhaps to help setting it up.

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Definitely read any network acceptable use policy and/or ask like @vonbrand says. This could be absolutely prohibited and 'network people' lose their sense of humor when random wireless (unsecured or not) is connected to their network. – cpt_fink Mar 29 '13 at 5:12

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