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The design philosophy and implementation of a low-cost, modular digital communications system are presented. This system is suitable for laboratory experiments in sampling, time-division multiplexing (TDM), aliasing, pulse code modulation (PCM), quantization error, cross-talk, intersymbol interference, bandwidth requirements, noise performance, parity checking, and analog signal reconstruction. The system has been tested in an undergraduate laboratory with no failures and excellent student response. The entire system hardware costs under $500.00 and the system is expandable to include additional modules, both digital and analog.