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A GSM modem is a specialized type of modem which accepts a SIM card, and operates over a subscription to a mobile operator, just like a mobile phone. From the mobile operator perspective, a GSM modem looks just like a mobile phone.
When a GSM modem is connected to a computer, this allows the computer to use the GSM modem to communicate over the mobile network. While these GSM modems are most frequently used to provide mobile internet connectivity, many of them can also be used for sending and receiving SMS and MMS messages.