Modems were first used with teletype machines to send telegrams and cablegrams. Digital modems were developed from the need to transmit large amounts of data for North American air defence during the 1950s. The first commercial modem was introduced in 1962. Dennis C. Hayes invented the personal computer modem in 1977, marking the emergence of the online and Internet era. In the beginning modems were used primarily to communicate between data terminals and a host computer. Later the use of modems was extended to communicate between hosts in networks. This required modems that could transmit data faster, leading to the introduction of compression techniques to increase data rates and error detection and correction techniques to improve reliability. However, still faster transmission speeds were required.
A traditional modem, operating over traditional – mostly analogue – phone lines, has a data transmission speed limit of about 56 kilobits per second. A specification for an Integrated Services Digital Network (ISDN), which allows wide-bandwidth digital transmissions using the public switched telephone network, was introduced in 1984. A phone call can transfer 64 kilobits of digital data per second with ISDN and 128 kilobits with dual-channel ISDN. ISDN connections are used to provide a wide variety of digital services including digital voice telephone, fax, e-mail, digital video, and access to the Internet.
Faster still are the Digital Subscriber Line (DSL) protocol, introduced in the early 1990s, and the cable modem, introduced in the late 1990s. Each of these has a maximum data transfer rate of 1.5 megabits per second. DSL provides a broadband digital communications connection that operates over standard copper telephone wires. The connection requires a DSL modem, which splits transmissions into a lower band for ordinary telephone calls and an upper band for digital data. The drawback of DSL is that connected computers must be within a few miles of the closest transmitting station. A cable modem modulates and demodulates signals like a telephone modem but it transfers data much more quickly over cable lines – primarily fiber-optic or coaxial cable. Broadband over Power Lines (BPL) modems work similarly but utilize electrical lines to transfer data; BPL modems are plugged into electrical outlets. BPL modems may be used to access an Internet service provider over the local power lines, or they may use the wiring within a building to create a network for the computers there.