MODEM stands for

It comes from the term MOdulator DEModulator.

A modem converts a digital signal from a computer into an analog signal, so that can be transferred down a telephone line and then at the other end it is converted back into a digital signal so that it can be sent into the receiving computer. These two processes are known as modulation and demodulation.

A modem is a Modulator and Demodulator. It's like a bridge between computer and ordinary telephone lines. Telephone lines only accept analog signals but computers only accept digital (binary) signals so modems help link them.

The data is changed to represent 2 audio frequencies. These noises are superimposed onto a phone line audio. This is known as 'modulation'. The incoming signal of course has to be changed back again to binary data, this is known as 'demodulation'.

The Word modem is shorted for "Modulator-demodulator" referring to it's original use.
Modem = MoDem = Modulator + Demodulator

Modem is the device that modulates digital signals from Internal Network into analog signals onto analog lines towards ISP & demodulates analog signals into digital signals for use in Internal Network.