In SQL Server 2005 when the SQL server starts up and you have TCP/IP enabled the server instance is by default assigned a TCP/IP port. This port is used to facilitate the exchange of information between the server and the client. If you have multiple instances running each instance is forced to use a different port number and named pipe.
Note: You can change or modify the default port if you have named pipes enabled. See the Books on Line (BOL) for more information on making the changes.
When the SQL server starts the SQL browser service also starts and claims port 1434 after it reads the SQL server registry to identify all of the available instances for the server. It does so by identifying the installed instance(s) and determines which port and named pipe to use. In cases where your SQL server has more than one Network Interface Card (NIC) installed the browser service retrieves the first enabled port that is happens to come upon.
On the client side when the client machine makes a request the client network library sends a User Datagram Protocol (UDP) message back to the SQL server across port 1432 and the SQL browser service sends the client the port or named pipe for the requested instance. Then the client uses its network library to send a request back to the SQL server using the assigned port or named pipe and the communication is established.
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