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The 5-4-3 rule also referred to as the IEEE way (contrary to the Ethernet way) is a design guideline for Ethernet computer networks covering the number of repeaters and segments on shared-access Ethernet backbones in a tree topology. It means that in a collision domain there should be at most 5 segments tied together with 4 repeaters, with 3 segments containing active senders (i.e. terminals).
According to the original Ethernet protocol, a signal sent out over the collision domain must reach every part of the network within a specified length of time. The 5-4-3 rule ensures this. Each segment and repeater that a signal goes through adds a small amount of time to the process, so the rule is designed to minimize transmission times of the signals.
For the purposes of this rule, a segment is in accordance with the IEEE definition: an electrical connection between networked devices.
In the original 10BASE5 and 10BASE2 Ethernet varieties, a segment would therefore correspond to a single coax cable and any devices tapped into it. On modern twisted-pair Ethernet, a network segment corresponds to the individual connection between end station to network equipment or the connections between different pieces of network equipment.
This rule divides a collision domain into two types of physical segments: populated (user) segments, and unpopulated (link) segments. User segments have users' systems connected to them. Link segments are used to connect the network's repeaters together. The rule mandates that there can only be a maximum of five segments, connected through four repeaters, or concentrators, and only three of the five segments may contain user connections. This last requirement applies only to 10BASE5 and 10BASE2 Ethernet segments.
This rule is also designated the 5-4-3-2-1 rule with there being two network segments and one collision domain.
The 5-4-3 rule was created when 10BASE5 and 10BASE2 were the only types of Ethernet network available. The rule only applies to shared-access Ethernet backbones. The rule does not apply to switched Ethernet because each port on a switch constitutes a separate collision domain.
An alternate configuration rule known as the Ethernet way allows 2 repeaters on the single network and does not allow any hosts on the connection between repeaters
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