A modem converts digital data from your computer into an analogue audio signal which can then be transmitted over a telephone line.
Modern modems can have fax and voice mail capabilities built in as well.
The main factors to consider when obtaining a modem are the speed at which it can transmit and receive data and how accurately it performs this. An international organisation called ITU-T has established standards for analogue modems. These standards lay down specifications for factors such as speed, data compression and error correction. Generally the price of a modem reflects the standards that it supports. Modems that support the most modern and advanced standards will therefore normally cost more.