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Yes you have found your problem - the modem (DSL/Cable) isn't set up to run more than one PC. It may or may not be something you can turn on in the config - but some service providers actually charge to put more than one pc on the net at a time.
A router will solve the problem as it will do all the DHCP and lan to net routing for you.
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Good Hunting!
Captain Haplo
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