Operation Theory of DSL

The local loop of the Public Switched Telephone Network was initially designed to carry POTS voice communication and signaling, since the concept of data communications as we know it today did not exist. For reasons of economy, the phone 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 voiceband or commercial bandwidth.

At the local telephone exchange (UK terminology) or central office (US terminology) the speech is generally digitized into a 64 kbit/s data stream in the form of an 8 bit signal using a sampling rate of 8,000 Hz, therefore – according to the Nyquist theorem – 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 laws of physics - specifically, the Shannon limit - caps the speed of data transmission. For a long time, it was believed that a conventional phone line couldn't be pushed beyond the low speed limits (typically under 9600 bps). However, in the 1930s techniques were developed for broadband communications that allowed the limit to be greatly pushed.

The local loop connecting the telephone exchange to most subscribers is capable of carrying frequencies well beyond the 3.4 kHz upper limit of POTS. Depending on the length and quality of the loop, the upper limit can be tens of megahertz. DSL takes advantage of this unused bandwidth of the local loop by creating 4312.5 Hz wide channels starting between 10 and 100 kHz, depending on how the system is configured. Allocation of channels continues at higher and higher frequencies (up to 1.1 MHz for ADSL) until new channels are deemed unusable. Each channel is evaluated for usability in much the same way an analog modem would on a POTS connection. 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.
ADSL supports two modes of transport: fast channel and interleaved channel. Fast channel is preferred for streaming multimedia, where an occasional dropped bit is acceptable, but lags are less so. Interleaved channel works better for file transfers, where transmission errors are impermissible, even though resending packets may increase latency.

Because DSL operates at above the 3.4kHz voice limit it can not be passed through a load coil. Load coils are in essence filters that block out any non-voice frequency. They're commonly set at regular intervals in lines placed only for POTS service. A DSL signal can not pass through a properly installed and working load coil nor can voice service be maintained past a certain distance without them. Some areas that are within range for DSL service are disqualified from eligibility because of load coil placement. Because of this phone companies are efforting to remove load coils on copper loops that can operate without them and conditioning lines to not need them through the use of FTTN