If you are at home, then you are most likely using a modem to view this page right now (dial-up modem, cable modem, or DSL modem). The modem is what hosts the communication between your computer and the computers you are connecting to over the Internet. If you're on a network, then you're using a network card (Ethernet card most likely - and that may connect to your cable or DSL modem). A modem uses your phone line to transfer data to and from the other computers. Newer cable modems and DSL modems provide about 10 times the speed of a regular phone modem. These are usually external and plug into a network card in your computer.
Modem stands for "modulator / demodulator" and it encodes and decodes signals sent to and from the network servers. Good modems should be able to do all the encoding / decoding work on their own without having to rely on your computer's CPU to do the work.
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