Though a cable modem serves the same purpose as a typical analog modem, a cable modem is different in many ways. The biggest difference is that a cable modem is much faster. While a 56K modem can receive data at about 53 Kbps, a cable modem can haul it in at about 1.5 Mbps. That's about 30 times faster. Though the actual Internet bandwidth over a cable TV line is up to 27 Mbps for downstream to the subscriber and about 2.5 Mbps upstream, since the local provider may only have a T1 connection, which maxes out at 1.5 Mpbs, that will be the maximum transfer rate for the suscriber. Also, a cable modem doesn't hook up to a phone line; it connects to a local cable TV line, hence the term "cable modem". This allows computers equipped with a cable modem to have a continuous connection to the Internet. No dialing the ISP everytime you want to check your e-mail. Cable modems, which have a much more complex design than telephone modems are usually external devices, but they can be integrated within a computer or set-top box. Finally, instead of connecting to a serial port, cable modems attach to a standard Ethernet card so that they can transfer data at the fastest speed possible.
The way the cable modem system works is pretty complex. All cable modems are attached to a coaxial cable line owned by some cable TV company where they connect to the company's Cable Modem Termination System (CMTS). Cable modems connected to the main line can receive from and send signals only to the CMTS, not to other cable modems on the line. In some cases, upstream signals are returned by telephone rather than the cable line, in which case the cable modem is known as a telco-return cable modem. It just makes so much sense, doesn't it. Currently, the largest cable modem company is At Home.