how do ISPs gain access to the internet so that they can provide us access through them, and how would i go about doing that if i wanted to be a private 'isp' for the computers in my house and perhaps some friends

Small ISPs "buy wholesale" from bigger ISPs... up to NSPs who run the backbones. This is for connectivity to the internet. The ISP you deal with probably adds services like a mailbox , local dialin, support, etc.

For the computers in your house... are they all connected with ethernet or something? Then set up one PC as a router - Linux does it really well - and connect it to an ISP. Bingo, everyone can get to the net through your box. Start with the IP Masquerading HOWTO on tldp.org.

"Perhaps some friends" - how will you connect their computers to your router?

Doesn't sound like you want to sell your internet connection, but you should also think about whether the ISP you deal with will allow you to reditribute their internet feed. Start by reading their terms and conditions.

Actually I used to to this a few years ago when I first got DSL. There are two reasons you would do this.

1. Your network is not connected to the internet and you need to use it when you are away. - For this you would just need a pc with a 56k modem and a phone line coming in. You then configure the modem to listen for incoming connections (I did this with NT, so I am not sure how to do it on linux). Simple as that... when you are away you dial into the number you have assigned to the pc with the listening modem.

2. With a little work you could let someone dial in on interface 1 (modem) and the access the internet through a proxy server you are running. This assumes you have another connection to route to them... like dsl, cable, etc...

Anyway, it has been a while since I did it, and to tell you the truth it is more trouble than it is worth. I just did it because I was curious if it would work.