When using a dial-up or ISDN connection method, the ISP cannot determine the caller's physical location to more detail than using the number transmitted using an appropriate form of Caller ID; it is entirely possible to e.g. connect to an ISP located in Mexico from the USA. Other means of connection such as cable or DSL require a fixed registered connection node, usually associated at the ISP with a physical address.
source; http://en.wikipedia.org
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