While on one of my random surfing sessions I came across the website of Pete Stevens. Pete mentions that his neighbours are getting a free ride on his wireless Internet connection—he can either encrypt it or choose to have some fun. He opted for fun!
It looks like Pete's using a Linux or BSD gateway on his network which runs essential services like DHCP (rather than using the server built in to his wireless router). This gives him a lot of control and lets him play around.
The first thing Pete has done is to split his network in two; trusted and un-trusted. This is easily done by defining two subnets in dhcpd.conf whereby unknown clients are denied access to the trusted subnet and authorised clients are identified by MAC (this is not fool proof but it's just a bit of fun).
Once the network has been split in to trusted and un-trusted clients Pete goes on to show how you can have some fun with the neighbours. First off it's the obvious trick of restricting access to one webpage; a simple IPtables rule will see all of your unauthorised clients hitting your site of choice. A webpage recently linked to in the comments section of one of my blogs seems like a comical choice. Getting a little more technical (and perhaps a little more evil) there is the option of teasing these users by giving them free Internet access but introducing some 'bugs'. Redirecting via a transparent squid proxy and adding a little script to interfere with traffic Pete suggests using mogrify to flip all images upside down and back to front; that'll certainly leave his freeloading neighbours a little baffled!
Of course the best thing to do is to encrypt your wireless network!