(info told to me by Nelson on 9/11/97)
Our phones are analog wires running back to a central switch, which then samples the analog 8,000 times per second with 8 bit samples. This digital information is sent across the country (on what are called "T-1 trunk lines"), and then is converted back to analog at another switch before being sent down an analog line into somebody else's home. Therefore, the absolute theoretical limit to how much information can be sent is 8,000 x 8 bits = 64,000 bits per second (64 kbit for slang).
In some high percentage of these ancient T-1 lines (the digital lines that run across country), a random bit is always wrong once every so often for arcane technical reasons. But the bit is always in the least significant bit in the 8 bit samples and happens once every second or so, and this is so minor that our human ears just ignore it. But modems have to pay attention, so they ignore the bit that *MIGHT* be bad, which is 1 out of every 8 bits. 7/8 of 64kbit is 56 kbit.
The really strange thing about 56kbit modems is that they are asymetric. As an AOL subscriber you talk to America Online at 28.8 kbit, but then AOL can send you 56 kbits downstream. The fundamental reason is that your end of the connection is an analog telephone line, and that AOL's end of the connection is a digital telephone line. In other words, their hookup is better than yours. The phone company's equipment limits (throws away high frequencies) the analog sounds coming from your modem before digitizing them and sending them to AOL. AOL is feeding digital directly into their end, and the phone company's equipment doesn't limit this digital signal in the same way. (There's MUCH more to this, but that's the general idea.) So if two private individuals have 56 kbit modems and call each other over normal telephone lines, they really only have a 28.8 kbit connection.
Ok, so why does the box on my 56 kbit modem have a tiny disclaimer that the government regulations only allow it to be 53 kbit? Amusingly enough, if AOL sends you the full-bandwidth 56 kbit transmissions, your phone line emits electromagnetic waves just barely out of legal "consumer home approved frequencies". Obviously 56 kbit isn't harmful to anyone or anything, so these laws are probably going to be repealed or modified in the next year or so to allow the full bandwidth 56 kbit transmissions.
As old T-1 trunk lines get replaced, the technical reason that makes the 56 kbit modems throw away 1/8 of the data is disappearing. If the trunk line between you and your destination happens to be new enough, and you have the right modem, you can get the full 64 kbits per second. To achieve higher data rates than 64 kbits per second, you MUST have a new higher bandwidth phone line installed to your home (and pay for it) for a better connection to the internet. These come in many forms and are available today from the phone company with such names as ISDN (128 kbits/sec) or a T-1 line (about 10 times as fast as ISDN). But just hope and pray that the phone companies get lots of competition, because they charge far too much for these premium connections.
I sat in the office next to Nelson's office for two years, and I can testify Nelson knows more esoteric, useful, and useless trivia about the computer science industry than anyone else I've ever met. And it just so happens this is one tiny little nugget that he had stored away in his brain. If you want to know more about Nelson, click here.