DTE - Data Terminal Equipment
DCE - Data Communications Equipment
A Data terminal equipment is an end device that converts incoming signals into user information or convert outgoing user information into transmission signal. This device is usually a UART chip found on a computer system.
A Data Communications Equipment is a device that communicates with the DTE as well as with the outside communication network. It is usually a hardware device that establishes, maintain and terminates the connection between DTE and outside network. Data Communications Equipment is also known as Data Circuit-terminating equipment or data carrier equipment.
The difference between DTE and DCE could be easily understood with the help of a communication scenario. Suppose we have a computer system which is connected to a modem for Internet connectivity. The computer generates the information and transfers it to the modem, the modem further transfers this information to the communication network, say Internet.
In the above scenario, the computing device is known as a Data terminal equipment (DTE), while the modem is known as a Data Communications Equipment.