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Have Bellsouth Fiber Optic service to home, no router, need to connect to VPN at work

I have DSL service at home. Rather than sending me a Westel or Motorola DSL modem, Bellsouth instead told me have fiber optic service, and when they came to install DSL at my house, they ran an Ethernet cable from a wall jack (they installed) directly to the back of my computer.

My Internet connection works fine. However, in Windows XP Control Panel | Network Connections, my Ethernet (Local Area Connection) icon has a yellow triangle and warns that I have "limited connectivity"

BellSouth tech support says not to worry about it.
They further explained that I dont need a router, and there is no actual DHCP Server, so apparently my computer is on one big happy BellSouth network.

Since the Local Area Connection (Ethernet adapter) in my computer cannot contact a DHCP Server, it auto-assigns itself a 169... IP Address.

Yet Internet access still works fine.

Besides the annoying "Limited Connectivity" alert that Windows keeps telling me about, my bigger problem is that I cannot connect to my VPN at work.

My office uses a SonicWall firewall, so I need to use the SonicWall Global VPN Client to connect.

The SonicWall VPN software is configured correctly. It can contact my work VPN (i.e. firewall) and attempt to connect. But it gets stuck at 'Acquiring IP Address'. (My firewall is supposed to send it back an IP Address so that it can become part of the internal network).

The status of the Global VPN connection never goes beyond 'Acquiring IP Address'.

I contacted BellSouth and of course they dont offer support for this. However, they did offer my two options that "might" help:

Option 1: Upgrade to the higher (ie more expensive) DSL Service, in which case they will give me a static IP Address

Option 2: Buy a router. (Linksys, for example) and let this device give my computer an IP Address

My question ... will option 2 really work?
If all I need is a valid (non -APIPA) IP address then why cant i just MANUALLY assign an IP address to my network adapter? (Like a 192.168.1.x) and then use BellSouth's IP address for the 'gateway'? Is it because BellSouth's 'gateway' IP will change (because I dont have a static IP Address)? If that's the case they how will a Linksys router solve the problem?

Looking for the cheapest solution here. Paying BellSouth more money for a 'static' IP Address is not an option.

Thank you doctors.
BroadbandRoutersHardware Firewalls

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A router is a networking device that forwards data packets between computer networks. Routers perform the "traffic directing" functions on the Internet. The most familiar type of routers are home and small office cable or DSL routers that simply pass data, such as web pages, email, IM, and videos between computers and the Internet. More sophisticated routers, such as enterprise routers, connect large business or ISP networks up to the powerful core routers that forward data at high speed along the optical fiber lines of the Internet backbone. Though routers are typically dedicated hardware devices, use of software-based routers has grown increasingly common.

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