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A modem modulates outgoing digital signals from a computer or other digital device to analog signals for a conventional copper twisted pair telephone line and demodulates the incoming analog signal and converts it to a digital signal for the digital device.
I have installed several Win2k based epos systems, which use an external modem for credit card authorization. Frequently, the modem becomes "not connected" in device manager and I have to scan for hardware changes to get it back. I have experienced similar problems with serial and parallel receipt...