== What OSI layer are modems working at? Why is PPP over modem not tunneling?  == 

 Why is PPP over a POTS or ISDN modems not considered as tunneling, which PPPoE and PPPoA is? PPP over modem is an LLC protocol encapsulated in another. Are modems considered as physical layer communicatin? Okay the serial link between the modem and the computer is physical layer protocol, while Ethernet connection between ADSL modem and the computer is a link layer protocol. A modem behaves as if it were a circuit switched physical link (an asynchronous serial link), but modern modems include LLC sublayer, since they divide the data into blocks (some kind of packets) rather than codewords (there are no start and stop bits), and performs packet mode flow control and automatic repeat request.