Home gateway enables a system of computers in a small network to access the wide area network (WAN) or the internet by means of port translation (NAT). It usually functions as an intermediary link between the user's modem and the Local Area Network or entire broadband network. Sometimes a home gateway comes with the modem itself, both in ADSL and cable network. The basic components of residential or home gateway are connectors, a processor, Random Access Memory and flash memory.

The functions of a home gateway in a network are just similar to those of a router, ethernet switch and a wireless access point. Like a router, it buffers and sends data packets to their destinations. It also links between various network segments when the data is being transferred according to MAC addresses.Residential gateways are of two types: 34 Mbps gateways and 155 gateways depending on the size of the internet traffic. Furthermore, there are two options over their management in the network. The first option, which is very common, is to let the ISP to manage and give data feed to gateway. The other option allows the ISP to just manage the data feed to the gateway.

The 34 Mbps residential gateways can allow traffic with a maximum of 1400 internet users. The gateways of this type are often provided and managed by the broadband provider and are common when the users prefer the first option. The 155Mbps gateways allow relatively huge number of users to use the network as more than 7500 users can be connected through the network. This type of home gateway permits the users to manage their gateway devices which are otherwise called L2TP Passthrough. On average, this type of gateway can support of a maximum traffic of 6500 users while the feasibility of supporting up to 8000 users is yet to be checked out.