How a Modem Works
Modems are controlled by software on your computer that uses a language called the Hayes command set or AT command set. When a modem is ready to connect to the Internet, the first thing it must do is go “off hook,” meaning open a connection with the phone line. After that, a command is issued telling it to dial a phone number to make a connection. A modem on the other end will answer the call, and once it does, your modem sends out a tone that tells the modem that another modem has called it.
The receiving modem will then reply with its own tones, establishing a basic connection. The modems now exchange information about how they will send data to each other. This process is called a “handshake.” During the handshake, the modems agree on things including connection speed.
When the connection is established, the modems can begin to exchange information. Your computer uses digital data using binary bits that are either on or off. Your computer sends this binary data to be communicated to the modem. The telephone system, however, works with analog information. This analog information is made up of streams of continuous electric current that vary in frequency and strength. The digital data your computer uses must be changed to analog information in order to be sent through the telephone system. The modem takes the digital data and modulates it into analog signals. These signals are then sent along the telephone system.
When the analog signals reach the receiving modem they are demodulated back to digital data, and sent into the computer through the serial port. This modulating and demodulating of data gave the modem its name: MOdulating/DEModulating.