While you are connected to the Internet, someone calling you will get a busy signal. When you disconnect, the call waiting will work normally on your phone line again. Any other devices connected to the line can disrupt your connection. Even nearby electrical devices may cause problems. Check for loose connections of any kind to or from the computer, modem or wall jack.
Line noise is a frequent culprit for dropped connections.
Try to make the lines in your own building as pristine as possible, unconnected to and away from other electrical devices. Be sure that you have the latest driver or firmware for your modem installed. Most modem manufacturers maintain websites where the latest drivers can be downloaded. Even if you recently purchased your modem, it may not have the latest driver. It may also be that you will need to add extra commands to the modem's initialization string to make a good connection.