Q. What are the ways to share a broadband (cable or DSL MODEM) Internet connection?
A. There are few ways to do it. One is to purchase another IP address from you provider as you mentioned. The best way is to purchase a broadband router such as the SMC Barricade (http://duxcw.com/digest/Reviews/Network/smc/smc7004br/smc7004br.htm). That is what I use. They cost about $100.
The Barricade has serial port for an external dial-up MODEM and a printer port and printer server. A printer can be connected to the Barricade and shared by computers on the local network. Not all printers will work with it. Many routers do not accommodate an Internet connection via an external dial-up MODEM and do not have printer port and server.
The barricade would also replace your hub with a switch. Your hub can be plugged into the Barricade if you ever get more than four PCs.
There are also single port routers on the market, routers that do not include an Ethernet switch or hub (http://duxcw.com/faq/network/hubsw.htm). I will review one shortly.
Another way to do it is with a software solution. There are two flavors: a proxy server and a NAT (Network Address Translator). I have found that a NAT works best for a small network. Windows 98 Second Edition (SE) and Millennium (Me) include ICS (Internet Connection Sharing; http://duxcw.com/digest/Howto/network/win98se/intro.htm and http://duxcw.com/digest/Howto/network/win98se_cab/intro.htm). It works OK for basic browsing and E-Mail functions, but has problems with some network games and conferencing programs, etc. It requires two network adapters in the PC connected to the Internet, one to the MODEM and the other to another PC via a crossover cable (http://duxcw.com/digest/Howto/network/cable/cable1.htm) or to a hub with a straight-thru cable as you have now. You would have to buy another adapter and cable.
Of the software I have tested, I have found that SyGate (http://duxcw.com/digest/Reviews/Network/sygate/sygate.htm) is the best NAT (it can also function as a proxy). The version of SyGate I reviewed requires two network adapters like Win 98 SE/Me ICS. The newest version is advertised to work with one network adapter in the host computer (the one running the NAT).
With a software solution you must have the host computer on for the other computer(s) (clients) to use the Internet. Most routers are small boxes running a specialized server that performs both NAT and firewall functions. With a router, only the router has to be on. The router is also easier to install, is generally faster, and has fewer problems.