How telephone local loop transmit two way communication?

Hi,

Can someone tell me how old telephone systems transmit two way voice communication using 2 wires only??

while reading i came across the term hybrid and i think 2 way voice by two wire transmission was made becoz of this..

But i fail to understand the operation of hybrid can some body please explain...

I read Wikipedia it says

The fundamental principle is that of impedance matching. The send signal is applied to both the telephone line and a ‘balancing network’ that is designed to have the same impedance as the line. The receive signal is derived by subtracting the two, thus canceling the send audio. [1] Early hybrids were made with transformers configured as hybrid coils that had an extra winding that could be connected out of phase. The name ‘hybrid’ comes from these special mixed-winding transformers

But im totally lost here..(

I came across a figure in net too that shows a typical connection..but icant make out how this thing works
http://www.pixtick.com/uploads/themaccabee_1329393627918.jpg

Check this

Hybrid coil - Wikipedia, the free encyclopedia

Hi
May be im wrong is it like balanced to unbalanced transformation??something like differential to single ended conversion that is happening in the local loop to telephone hand set interface & local loop to exchange by this hybrid??

A hybrid is one way to do it.

The basic principle is that the line carries both incoming and outgoing signals at the same time but you mathematically (as done with a hybrid transformer) subtract your known outgoing (transmit) signal from the total and the remainder must be the signal from the other end. In practise, some of the outgoing signal from the microphone is also fed to the earpeice (sidetone) to prevent the human reaction of shouting if you can't hear yourself!

Most modern telephones don't use hybrid transformers, they do the subtraction using op-amps.

Brian.