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If my neighbor (whom I have allowed to connect to my router) is sharing my internet via Bluetooth tethering, is there a way to prevent anyone else from sharing my internet via his or my Bluetooth without cutting him off?

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Basically, anyone allowed to connect to your router/wifi access point can in turn make their computer (or whatever device) into a router of their own. They can then, without your router even knowing, create their own little network and share internet amongst themselves, then relaying the traffic through one device.

You can generally see what devices are connected directly to your router from its administration page, but this will not show ones that are connected via bluetooth tethering or some other means, thus relaying through a device that does show up in the list.

Unfortunately, there's no easy way on a home router to prevent this type of thing. I think the best approach might be to talk to him and ask him if he's doing that, and negotiate a solution.

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    Potentially could limit the throughput by the neighbour's IP, but that would require that capability within the router. – schroeder Aug 10 '15 at 18:12
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Bluetooth does not create a strong internet signal so anyone connecting to it would have to pair to his device that is tethered. They would have to be in a 60 foot radius of that device in most cases. I don't think there is anything on your home consumer based router that will allow you to block him. Since he connects the Bluetooth device to the computer he is connected to your WiFi, and the traffic is routed through is laptop to his device. Filtering will not really work since the table will not show the MAC address of the device that is tethered.

Either way the distance is a major factor even so the max transfer rate in best case situations is only 24MB/s. As the device gets further away the signal degrades.

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    MAC address filtering will do absolutely nothing to restrict access aside from making just one computer able to connect to his router. The computer with the correct MAC can then act as a router and NAT packets from it to the destination. Thus the downstream devices' MAC address will never show up in the main router's ARP table. It should be noted MAC filtering is trivial to bypass for someone technical. – Herringbone Cat Aug 10 '15 at 17:58
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    @Herringbone_Cat upvoted your answer. You explained it a little better than I did. The user is still limited by distance of the Bluetooth connection and the transfer rate. – JukEboX Aug 10 '15 at 18:08
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    @Herringbone_Cat Bluetooth signal is too weak, if his friend tries to render his machine to a router then neither him nor anyone else could connect. Also MAC filtering is available in all routers, only skilled ones and in special conditions they could bypass the MAC filtering – user45139 Aug 10 '15 at 18:09
  • @begueradj Not necessarily. There's many ways to do this, a simple one would be: create an wifi network on using a phone/tablet connected via bluetooth and thus have a router. I wouldn't call someone who could bypass MAC filtering "skilled", I think it falls under the umbrella of "script kiddie who can follow instructions." – Herringbone Cat Aug 10 '15 at 18:11

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