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Global System for Mobile Communications (GSM) modems are specialized types of modems that operate over subscription based wireless networks, similar to a mobile phone. A GSM modem accepts a Subscriber Identity Module (SIM) card, and basically acts like a mobile phone for a computer. Such a modem can even be a dedicated mobile phone that the computer uses for GSM network capabilities.
Traditional modems are attached to computers to allow dial-up connections to other computer systems. A GSM modem operates in a similar fashion, except that it sends and receives data through radio waves rather than a telephone line. This type of modem may be an external device connected via a Universal Serial Bus (USB) cable or a serial cable. More commonly, however, it is a small device that plugs directly into the USB port or card slot on a computer or laptop.
A GSM modem is a generic communication device just like its wired ancestors, but since the service is subscription-based, it must have a SIM card installed. This card connects the modem to the proper provider and identifies the user of the device to the carrier network. In this way, the GSM modem operates just like a cellular phone; in fact, many cellular phones also use SIM cards for the same purpose. Since the SIM card actually contains all the subscription, membership, and user data, these cards are usually interchangeable between GSM modems and GSM cellphones.
Similar to the way dial-up modems converted analog signals to digital and back, GSM modems convert digital data to Short Message Service (SMS) messages for sending and receiving messages over the wireless network. SMS messages are small bursts of data which are sent and received like the data packets on dial-up modems.
Many third-generation (3G) and fourth-generation (4G) smart phones use GSM technology so that they can act as wireless hotspots for computers. They can be connected to the computer via a USB cable or wirelessly over a wide-fidelity (Wi-Fi) network or via Bluetooth®. This allows users to access the Internet with their smart phone acting as a GSM modem rather than a traditional Wi-Fi connection. For many users who have an unlimited data plan on their smart phone, this solution is less expensive than paying for a separate Internet connection, or for paying connection fees or memberships at public Wi-Fi hotspots.
It seems most people would be better off using a phone as a mobile hotspot, anyway. There are some exceptions -- those with limited data plans on a smartphone could easily exceed their monthly allotments and wind up paying an overage fee. Also, there is usually a fee attached by a cell company when you want to use a phone as a mobile hotspot -- there are cases when it might actually be cheaper to use a GSM modem with another provider and pay a separate fee to that company.
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