(1) A modem is a contraction of "modulator/demodulator." It is a device that connects the Computer to a telephone line (or, perhaps, another wire) for communication with another remote computer or information network. Modems may be internal or external to the computer case. Modems are classified according to the speed with which they send and receive information. (2) Equipment that converts Digital signals into analog signals for purpose of Transmission over a telephone line. signal is then converted back to digital form SO that it can be processed by a receiving computer. Modems are typically used to Link computers via telephone lines. Short for modulator-demodulator. Typical modems for home use are 14.4 kbps. 14 kilobytes per second translates into a transmission or receiving rate of approximately 1600 bytes per second.