In some parts of the world, modems are still an option. Even in North America, there are a surprising number of people still using dial-up. In 2008 somewhere around 12 percent of Canadians were still using dial-up. The Canadian telecom TELUS reported having 124,000 dial-up subscribers (compared to about 1.1 million broadband subscribers) as of 31 December 2008, so it is a niche market but not yet a dead one.

MODEM is an acronym for MOdulate DEModulate, referring to the fact that binary digits are modulated into sound, transferred over the telephone circuits, and then demodulated back into binary digits on the other side. To be technically correct, only 56k and slower modems are truly modems. Other line types, such as ISDN, are digital to begin with, so there is no modulation happening. These products are properly called Terminal Adapters (or TA for short), but most folks still call them modems. For the sake of convenience, we will use modem to refer to all these types of customer remote access equipment.

For small numbers of lines an 8-to-1 (8:1) ratio of subscribers to phone lines will allow your subscribers to get through without busy signals. As your ISP grows and the number of phone lines increases, you can increase the ratio to as high as 12:1 without busy signals. Plus, by having all of your phone lines in one city your phone bank will grow to exceed that of the national providers for your area. With more phone lines in one region, you can have the same (or higher) ratio and yet provide better service.

There are two basic types of modems: Analogue and Digital.

Analogue modems are the type that people use in their personal computers. In countries where telephone line quality is poor or digital lines are not available, analogue modems are the best choice. For most ISPs, however, digital lines are the standard.

With analogue modems your subscribers can connect at a maximum speed of 33.6kbps. When data compression (built into the modems) is added to the figure, speeds of 35k to 45k are commonly achieved.

With digital remote access servers your subscribers can connect at a maximum speed of 53kbps, although the maximum download speed is typically no more than 45k. Another advantage of using digital modems is that you can provide 64kbps and 128kbps ISDN service.

The biggest advantage to digital modems is reliability, and the biggest drawback is (or was) cost. About eight years ago analogue modems cost one-half to one-quarter that of digital ones, and analogue lines had one-half the monthly cost of digital. However, these days I think you would have a tough time finding any analogue modems to purchase, so this information is here just for the sake of nostalgia.

DSL and ISDN are pure digital formats, not modems at all. Digital transmission is much faster than analogue, even at the same speeds. These devices have the disadvantage, however, of only being able to transmit data over a short range (typically under 2 miles). As far as DSL is concerned, the cost of equipment can be prohibitively expensive for small ISPs. You'll need a few thousand subscribers before DSL is affordable. ISDN, on the other hand, goes hand-in-hand with the digital modems mentioned above. A digital remote access server can provide service for both 56k and ISDN customers.

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