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You still need to have the phone line (as well as the ethernet from the DSL modem) plugged into your computer. DSL in and of itself doesn't affect the phone operation.
I have what is probably a related question:
I have a Dell XPS 410n using the Ubuntu OS version 10.10. I have installed a software program, "efax-gtk" that allows me to fax postscript documents from my computer. I have Verizon DSL internet service, but the modem provided by Verizon, "Westell E90-610015-06" does not support fax messages. My question - is there some other modem I could use that would provide the same internet connectivity and support fax messages, or do I need to install a separate fax modem?
There are two ways to send a fax from your computer. You can do it over the DSL circuit using PamFax and Skype or similar service. That requires no modem on your computer, the fax is sent to servers via TCP/IP over your internet connection, who deliver it either to another computer via Internet, or to a real fax machine, via voice grade telephone. I don't know if Pamfax is available for Unbuntu however.
Most dialup modems support fax operation, so in theory you can just leave the old dial up modem (or built in modem) connected to the phone line through a DSL filter, and the fax software will dial out using the modem. Fax over telephone lines uses the same frequencies voice communications use, so the DSL filter doesn't impact them any more than it it impacts voice calls. So if your computer has a built in Modem, you are probably good to go by just connecting it to a telephone line through a DSL filter. If not, the choices are buy a modem with fax capability, or become a Skype/PamFax user. PamFax isn't free, but it is a lot less expensive than many long distance telephone calls.
Your DSL modem has essentially nothing but the term Modem in common with a dialup modem. I know of no good reason to put both a dial up and a DSL modem in the same package, so I don't think any exist. Your existing dial up modem should be able to coexist with the DSL equipment without a problem.
Thank you, Matthew. This is very helpful.