Echo cancellation was the next major advance in modem design.
Local telephone lines use the same wires to send and receive, which results in a small amount of the outgoing signal being reflected back. This is useful for people talking on the phone, as it provides a signal to the speaker that their voice is making it through the system. However, this reflected signal causes problems for the modem, which is unable to distinguish between a signal from the remote modem and the echo of its own signal. This was why earlier modems split the signal frequencies into "answer" and "originate"; the modem could then ignore any signals in the frequency range it was using for transmission. Even with improvements to the phone system allowing higher speeds, this splitting of available phone signal bandwidth still imposed a half-speed limit on modems.