The terms modem, gateway and router are often used interchangeably, but in reality, they all mean something different from one another.

What is a Modem?

A modem or modular demodulator is a hardware device that converts data encoded in a digital format designed for communication with devices into something that is suitable for transmitting using telephone wiring or radio.

More specifically, a modem modulates one or more carrier wave signals to encode digital information for transmission and then demodulates signals to decode the transmitted information.  Ultimately the goal is to produce a signal that can be transmitted easily and decoded reliably whilst being able to reproduce the original digital data.  Modems can be used with almost any means of transmitting analogue signals such as light-emitting diodes (LEDs) and radio.

An example of modem use is when they are used to convert the digital data of a computer into a modulated electrical signal for transmission over telephone lines, which in turn is demodulated by another modem at the receiver’s side in order to recover the digital data.This is what happens when you connect a router to an Internet service. 

What is a Gateway?

A gateway is a piece of network hardware or software used to connect two separate networks together, and this is different from routers or switches as they can communicate using more than one protocol when connecting to multiple networks.

The term gateway is also loosely used to refer to a computer or computer program configured to perform the tasks of a gateway, for example, a default gateway or router, or in the case of HTTP, the term gateway is used as a synonym for reverse proxy.  An example of gateway use is when your network router via your local area network (LAN) connects to the Internet, a wide area network (WAN). 

Internet of things (IoT) gateways provide a bridge or protocol convertor between other IoT devices, the cloud or Internet, and any user equipment such as smartphones. IoT gateways provide a communication link between the field and cloud as well as provide offline services and real-time control of devices.

What is a Router?

A router is a networking device that forwards packets of data between computer networks, in fact the Internet uses many routers to perform the traffic directing functions. When data is sent through the Internet using a web page or email, it is in the form of data packets that are forwarded from one router to another through the networks until it reaches its destination node.  For this to happen, a router is usually connected to one or more data lines from different Internet Protocol (IP) networks. This means that when a data packet arrives on one of these lines, the router reads the network address information in the package header to determine the ultimate destination, it then uses a routing table or routing policy to direct the packet to the next network on its journey.

A typical home or small office router will simply forward IP packets between computers and the Internet, but more expensive enterprise routers are used to connect large businesses or Internet Service Provider (ISP) networks to powerful core routers that forward data at high speed along the optical fibre lines of the Internet backbone.
 

In summary, a modem converts digital and analogue signals, a gateway is used to connect two separate networks together, and a router is used to forward data packages on a network.  It should be noted that most modern routers will contain a modem and gateway functionality.