I don't know what the fuck this guy is doing here (at about 0:38), but it just blows my mind!

He's plugging the handset from an old school telephone into some sort of device with handset shaped grooves! it's like seeing someone patch a cable in some old movie with operators, or in something you'd see in a hacker movie. I have no idea how this works, is it based on tones that come through and there is a mic that interprets those tones into bytes of code? Is this just maybe for the dude to remember not to hang up the phone and lose his internet connection?
Either way, it seems surreal and as a computer scientist I'm curious to know how the hell that thing works or what the purpose is, because it seems awfully inefficient!
I originally saw this on Jeff Pulver's blog post
here.