A modem is a device which is used to connect a computer to a telephone line for the purpose of transmission. It is because of a modem, your PC can be connected to the internet through a telephone line. The computer is a digital device and it works on digital signals whereas the telephone is an analogue device and works on analogue signals. At both the ends, computers are connected to telephone lines through modem because it is modem which converts digital signals to analogue and again back to digital signals at receiving end. The process of converting digital signals to analogue signals is called Modulation and the process of converting analogue signals to digital is known as Demodulation, (Modem = Modulation + De = Modulation).
The speed of transmission is measured in bps. Modems usually operate at speeds ranging from 2,400 to 28,800 bits per second over standard telephone lines, and at faster rates over leased lines. A suitable communication program is needed to operate the modem.