The hardware that performs modulation and demodulation is called a modem.

Analog signals could be compared to a fairly steady stream of water coming out of a garden hose. Analog signals from a single, continuous wave that fluctuates a certain number of times over a certain time period; this fluctuation rate is called the frequency or hertz. Sometimes our voices sound high (composed of high-frequency sound waves: many wave fluctuations per second), and sometimes our voices sound low (composed of low-frequency sound waves: fewer wave fluctuations per second). Analog signals can also differ in amplitude, or loudness; a soft voice is at low amplitude. Most established telephone systems transmit data in analog form. 
Analog and Digital

In contrast to human voices, computers communicate with each other in streams of binary digits (bits) transmitted in patterns of digital signals – series of on and off pulses. These signals can be compared to the short bursts of water that shoot out of a timed garden sprinkler; they are discontinuous (discrete). For data to travel from one computer to another across the phone lines, the sending computer’s digital form at the receiving end. This process is called modulation and demodulation.

Modulation converts digital signals into analog form so that data can be sent over the phone lines. Demodulation converts the analog signals back into digital form so that they can be processed by the receiving computer. The hardware that performs modulation and demodulation is called a modem (modulate/demodulate). The sending computer must be connected to a modem that modulates the transmitted data, while the receiving computer must be connected to a modem to demodulate the data. Both modems are connected to the telephone line.

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