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I am quite confused about how increasing channel width in 802.11 Wireless Networks leads to doubling the data rate. And If that's the case why don't we use 160 MHz wide channel in 5 GHz band?

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I am quite confused about how increasing channel width in 802.11 Wireless Networks leads to doubling the data rate.

While not a perfect analogy, think of it as a road. You can move twice as much traffic on a road if you have two lanes as compared to a road with one lane.

By increasing the number of frequencies on which you can send a signal, you are increasing the ability to send additional data on each of those frequencies.

And If that's the case why don't we use 160 MHz wide channel in 5 GHz band?

Because the amount of data that you send at one time isn’t the only consideration to consider when you are planning a wireless network. 802.11 is a shared medium, meaning every device using a frequency must share access to the medium. The ability to divide clients into different frequency groups properly can dramatically improve the efficiency of a wireless network.

With 160MHz wide channels, depending on the RF region you are in, you have at best three (and most commonly only 2) non-overlapping channels. This severely limits the ability to design a wireless network that doesn’t interfere with itself. This has been one of the major problems for 2.4GHz wireless network designs for well over a decade, and part of the reason 5GHz is preferable for most wireless applications.

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