The simplest approach to the design of modems is to treat the entire PSTN as a linear analog network. [Note that PSTN is almost entirely due to the use of pulse-code modulation (PCM) for the transmission of voice signals.]
In such a setting, analog-to-digital and digital-to-analog conversions are needed whenever the modems send signals to and receive signals from the PSTN. The modem configuration depicted in the above figure exhibits 'symmetry' in that both modems are identical. The data rate downstream (from the ISP to the user) is exactly the same as the data rate upstream (from the user to the ISP).
For amore efficient use of PSTN, we treat it as what is really is an almost entirely digital network that is nonlinear.
Since the ISP is digitally implemented therefore the need for analog-to-digital conversion at the ISP modem is eliminated. So, the communication between the ISP and the PSTN can be entirely digital as portrayed in the above figure. However, the user's modem has to remain analog because the local loop is analog. This, in turn, requires the use of analog-to-digital and digital-to-analog conversions each time the user's modem sends signals to and receives signals from the PSTN.
