One of the many forward-looking changes found in Mac OS X Lion is the sad fact that Apple appears to have formally discontinued support for old analog modems.
Apple’s USB modem appears to no longer function under Lion, which is just as well, since I sincerely doubt that more than 10 people in the world still actually use one of these things. The above error message is displayed when one attempts to connect an Apple USB modem in Lion.
The issue seems to be that the drivers required for your modem are not included in Lion. Even if they were, it seems that the drivers only work if your Mac kernel is booted into 32-bit mode, and since Lion only boots and runs in 64-bit mode, the modem no longer functions.
It would be a silly and ultimately wasted move for Apple to developer a 64-bit driver for their USB analog modem, right? Or do people still use these to turn their Macs into the long-lost fax machine they never knew they missed?