Shannon's Limit

Your computer's digital data (just ones and zeros) must be converted to analog waves before they can travel through conventional copper telephone wire. Why? Because the telephone system was built to carry voice traffic, which is analog. The conversion process happens inside your modem, where the computer's digital ones are turned into peaks of an analog wave and zeros are turned into troughs. On the other end of your connection, another modem reconverts the analog wave into digital ones and zeros.

An inescapable component of the conventional telephone connection is noise, random data caused by electromagnetic interference (lightning and other electronic equipment, to give two examples). As the speed of an analog signal increases, so too does the effect of the noise on the signal itself. When the noise reaches Shannon's Limit, it swamps the peaks and troughs of the analog signal, making it unintelligible. The operating spectrum for the conventional telephone system runs from 300 hertz to 3,000 hertz. (What's a hertz? It's a cycle per second.) Fencing a modem signal in between 300 hertz and 3,000 hertz doesn't give it too much room to do its thing--that is, to send gobs of digital information. The more scientifically minded can read more here.

ISDN, ADSL, and other wicked-fast technologies roam much larger frequency pastures; hence their greater speed. ISDN does its magic by using three telephone wires at once to send and receive pure digital messages, abandoning the traditional analog signal. Faster still are fiber optics connections, which encode data as bursts of light that move along thin glass filaments. These signals are all but impervious to electromagnetic interference and other noise along the transmission.