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Modem is defined as an abbreviation for modulator-demodulator, a device that makes it possible for computers to communicate with one another without being directly connected to each other. 

A Modem is a combined device for modulation and demodulation. 
For example, between the digital data of a computer and the analogue signal of a telephone line.

A modem converts digital signals generated by the computer into analog signals which can be transmitted over a telephone or cable line and transforms incoming analog signals into their digital equivalents.

The main benefit of a modem is that it allows you and your devices to access the internet and communicate with the outside world. The downside is that a modem can allow viruses and hackers to enter your network.