Modems provide point-to-point communication between two digital devices using analog circuits. Modems convert digital signals to analog signals, transmit them and then convert the analog signals back to digital signals.
Digital circuits transmit data using a series of discrete pulses that indicate either a zero or a one. Telephone circuits transmit voice as a series of electromagnetic waves. Sending digital data over a telephone wire requires modulation, by means of which digital pulses become waveforms that travel as voice signals, but they possess a distinct shape. On the receiving end, the demodulator detects the waveforms and converts them back to digital pulses. The term "modem" comes from a combination of these two functions: (mo)dulation and (dem)odulation. This type of network communication requires a modem at each end of the analog circuit.
Until the 1960s, computers needed dedicated circuits for network communication, which limited their capabilities. With the modem, digital devices could communicate using existing telephone circuits and transmit digital data as an analog signal. This development extended network communication to any location with a telephone circuit. Early modems had very low transmission speeds, and reliability remained an issue. However, a series of developments in the 1980s led to high-speed communication via modem for business, and that process became commonplace until the introduction of broadband fiber-optic networking.