Brunette Girl With The Old Phone

Calls to parties beyond the local exchange are carried over "trunk" lines which establish connections between exchanges. In modern telephone networks, fiber-optic cable and digital technology are often employed in such connections. Satellite technology may be used for communication over very long distances.
In most telephones, the transmitter and receiver (microphone and speaker) are located in the handset, although in a speakerphone these components may be located in the base or in a separate enclosure. Powered by the line, the transmitter (A2) produces an electric current whose voltage varies in response to the sound waves arriving at its diaphragm. The resulting current is transmitted along the telephone line to the local exchange then on to the other phone (via the local exchange or a larger network), where it passes through the coil of the receiver (A3). The varying voltage in the coil produces a corresponding movement of the receiver's diaphragm, reproducing the sound waves present at the transmitter.
Along with the microphone and speaker, additional circuitry must be incorporated that will prevent the incomming speaker signal and the outgoing microphone signal from interfering with each other. This is accomplished through a hybrid coil (A3). The incoming audio signal passes through a resistor (A8) and the primary winding of the coil (A3) which passes it to the speaker (A1). Since the current path A8 - A3 has a far lower impedance than the microphone (A2), virtually all of the incoming signal passes through it and bypasses the microphone.
At the same time the DC voltage comming through the line drives a current which is split between the resistor-coil (A8-A3) branch and the microphone-coil (A2-A3) branch. The DC current through the resistor-coil branch has no effect on the incoming audio signal and so is irrelevant. But the DC current passing through the microphone is turned into AC current which then passes through only the upper branch of the coil's (A3) primary winding, which has far fewer turns than the lower primary winding. This causes a small portion of the microphone output to be fed back to the speaker, while the rest of the output goes out the phone line.