The basic unit of networking in bluetooth is a piconet, consisting of a matter and from one to seven active slave devices. The radio designated as the master makes the determination of the channel and phase that shall be used by all devices on this piconet. The radio designated as master makes this determination using its own device address as a parameter, while the slave devices must tune to the same channel and phase. A slave may only communicate with the master and may only communicate when permission is granted by the master. A device in one piconet may also exist as part of another piconet and may function as either a slave or master in each piconet. This form of overlapping is called scatternet.
The advantage of piconet/scatternet scheme is that it allows many devices to share same physical area and make efficient use of the bandwidth. A bluetooth system uses a frequency-hopping scheme with a carrier spacing of 1 MHz. Typically upto 80 different frequencies are used for a total bandwidth of 80 MHz. If frequency hopping were not used, then a single channel would correspond to a single 1 MHz band. With frequency hopping a logical channel is defined by the frequency hopping sequence. At any given time, the bandwidth available is 1 MHz, with a maximum of 8 devices sharing the bandwidth. Different logical channels can simultaneously share the same 80 MHz bandwidth. Collisions will occur when devices in different piconets, on different logical channels, happen to use the same hop frequency at the same time. As the number of piconets in an area increases the number of collision increases and performance degrades. In summary, the physical area and total bandwidth are shared by the scatternet. The logical channel and data transfer are shared by a piconet.

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