From the WikiPedia Digital Subscriber Line article:
The Public Switched Telephone Network was initially designed to carry POTS calls, as the concept of data communications as we know it today did not exist. For reasons of economy, the system nominally passes audio between 300 and 3,400 Hz, which is regarded as the range required for human speech to be clearly intelligible. This is known as commercial bandwidth. Dial-up services using modems are constrained by the POTS channel’s Shannon capacity, which indicates the maximum data rate which can be supported by a given amount of bandwidth.
At the Local Exchange (UK terminology) or Central Office (US terminology) the speech is generally digitised into a 64 kbit/s data stream in the form of an 8 bit signal using a sampling rate of 8,000 Hz, therefore any signal above 4,000 Hz is not passed by the phone network (and has to be blocked by a filter to prevent aliasing effects). The bandwidth between the commercial bandwidth limit and the channel limit can be utilised in a fully digital end to end connection to achieve a full 64 kbit/s on an ISDN line.
The local loop connecting the central office to most subscribers is capable of carrying frequencies well beyond the 3.5 kHz upper limit of POTS. Depending on the length and quality of the loop, the upper limit can be as high as the tens of megahertz. DSL takes advantage of this unused part of the circuit by creating 4312.5 Hz wide channels starting between 10 and 100 kHz, depending on how the system is configured. Each channel is evaluated for usability in much the same way an analog modem would on a POTS connection. Allocation of channels continues at higher and higher frequencies (up to 1.1 MHz for ADSL) until new channels are deemed unusable. More usable channels equates to more available bandwidth, which is why distance and line quality are a factor. The pool of usable channels is then split into two groups for upstream and downstream traffic based on a preconfigured ratio. Once the channel groups have been established, the individual channels are bonded into a pair of virtual circuits, one in each direction. Like analog modems, DSL transceivers constantly monitor the quality of each channel and will add or remove them from service depending on whether or not they are usable.
The commercial success of DSL and similar technologies largely reflects the fact that in recent decades, while microchips and disk drives have been getting faster and cheaper, the cost of digging holes in the ground remains very high. All flavors of DSL employ very complex digital signal processing algorithms to overcome the inherent limitations of existing POTS wires. Not long ago, the cost of such signal-processing power would have been prohibitive, but today the cost of installing DSL for an existing local loop, with a DSLAM at one end and a DSL modem at the other end, is orders of magnitude less than would be the cost of installing a fiber-optic cable over the same route and distance.
Most residential and small-office DSL implementations reserve low frequencies for POTS service, so that with suitable filters and/or splitters the existing voice service continues to operate independent of the DSL service. Thus POTS-based communications, including FAX machines, can share the wires with DSL. However, in most cases only one DSL modem can use a local loop at a time; it is generally not possible for a customer to have multiple DSL connections over a single local loop. As of 2005, the standard way to let multiple computers share a broadband connection is to purchase an inexpensive router that establishes a local Ethernet or Wi-Fi network on the customer’s premises.
Once upstream and downstream channels are established, they are used to connect the subscriber to a service such as Internet access.
