Data Communications is the function of transferring a digital signal from one digital device to another. Data transmission and data communications mean two different things. Data communication has a much wider meaning which embraces not just electrical transmission but, any other factors involved in controlling, checking and handling the movement in a communication-based computer system.

The simplest means to provide a data communication setup is to directly connect two DTEs (Data terminating equipment – usually computing devices) by a proper interface like RS232c. This is feasible only for short range communication and requires no modem but requires high-quality coaxial cables.

The simplest method of setting up data communication between two DTEs lying far distant apart is to use –

Telephone network or dedicated transmission medium
Modem
Such a simple setup is shown below. In the setup shown, modems use digital signals from a DTE to modulate a self-generated audio frequency signal in voice telephony range so that the digital information can travel across the telephone network and at receiving end, demodulation of the analog signal takes place to recover the sent digital signals across the line. Now, this is one of the basic and simplest data communication setup for beginners to understand.

SENDER DTE -(digital signal)->Modem -(analog)-> PSTN -(analog)-> Modem -(digital)->RECEIVER DTE