The spectrin network on the cytoplasmic surface of the erythrocyte membrane is modeled as a triangular lattice of spectrin tetramers. This network obstructs lateral diffusion of proteins and provides mechanical reinforcement to the membrane. These effects are treated in a systematic and unified manner in terms of a percolation model. The diffusion coefficient is obtained as a function of the fraction of normal spectrin tetramers for both static and fluctuating barriers. The elasticity of the network is calculated as a function of the fraction of normal spectrin and the ratio of bending to stretching energies. For static barriers, elasticity and lateral diffusion are incompatible: if a network is connected enough to be elastic, it is connected enough to block long-range lateral diffusion. The elasticity and the force required for mechanical breakdown go to zero at the percolation threshold; experimental evidence suggests the existence of a stability threshold at or near the percolation threshold. The model is qualitatively applicable to other cells with membrane skeletons, such as epithelial cells, in which localization of membrane proteins is essential to differentiation.