The Bell 103 uses audio FSK (AFSK) for data encoding. Each station uses different audio frequency pairs. The originating station uses a mark tone of 1270 Hz with a space tone of 1070 Hz, but the answering station uses a mark tone of 2225 Hz with a space tone of 2025 Hz.

Modems use protocols during data exchange. Bell 103 protocols are as follows:

• Microcom Networking Protocol (MNP) Levels 1-4: Deployed in the 1980s as an industry standard due to high demand, this protocol enables error-free and asynchronous data transmission.
• MNP Level 5: This protocol incorporates the first four MNP levels with a data compression algorithm.
• V.42 and V.42bis: These protocols are internationally recognized for data compression and error control.

Although the Bell 103 modem is rarely used in modern computing, the Bell 103 encoding scheme is still used by devices known as Bell 103 or compatible Bell 103 modems. Additionally, higher speed modems still have Bell 103 emulation capability, providing a fallback method for low-speed data transmission under high-speed but inadequate channel conditions.