Modems and ISDN
The modern telephone system is designed to carry the sound of a human voice talking normally. The engineers save money by cutting out the high a low pitch sounds that occur only in music, or sounds that last for a very short period of time. Modems convert data into sound so that it can be sent through the phone system. Just as the telegraph sent data by alternating dots and dashes, the earliest modems sent data by alternating the sound on a phone between two tones. However, modern modems move much larger amounts of data by sending combinations of tones at different frequencies. If you have access to all possible frequencies, there is an enormous amount of data you can carry. Each TV channel is about 3 Megabits of data per second, and a cable system carries nearly 100 channels.
However, the telephone system is designed to only handle the frequencies of the human voice, and the maximum amount of data it can theoretically carry is 4000 bytes per second per phone line. Trying to squeeze as much data as possible into the available frequencies makes the signal vulnerable to "noise" that is introduced from a bad connection, "crosstalk" from other phone conversations in the same bundle of wires, and external electrical sources. Computer chips made it possible to build a "smart" modem that transmits a block of data, waits for an acknowledgment, and retransmits the block if it something went wrong the first time.
Then data compression was added. In current use, the information actually exchanged between the two modems may be much more complicated and sophisticated than the data that either computer sees.Digital phone equipment is used everywhere except at your home or office. Since the limit on data transmission is caused by the conversion of sound to a digital signal, the obvious direct solution to the problem is to extend digital signaling all the way to the home. A T1 line would provide this type of connection. It carries 24 phone circuits each with 8000 bytes per second, or a single circuit of around 1.5 Million bits per second.