An improved data communication technique may be employed with modems through a packet network. The disclosed technique facilitates a virtual end-to-end connection between two modems such that the two modems can effectively behave as if directly connected to each other, unaware of any modifications to the data being transferred or to the protocols configured within the communication connection. Preferably, a data communication system for carrying out the communication technique demodulates data coming from a first modem, transports the demodulated data in packets between two gateways, and then remodulates the data before delivering to a second modem at the other end. In accordance with various aspects of the present invention, various alternatives for calling and quality of service set-up mechanisms, the establishment of a communication session, the transport of data during a communication session, the flow control between all system components involved, and the mechanisms for the termination of communications are also provided.