Redhat8 - pppd error on connect to isp

[weare]

I've setup RH8 as a proxy running web content filtering.
This all runs fine but now the client has asked me to add a modem so this becomes the router machine.
Fine, but when I tell the modem to connect it dials the ISP then produces these errors:

--> Initializing modem.
--> Sending: ATZ
ATZ
OK
--> Sending: ATQ0 V1 E1 S0=0 &C1 &D2 +FCLASS=0
ATQ0 V1 E1 S0=0 &C1 &D2 +FCLASS=0
OK
--> Modem initialized.
--> Sending: ATDT908274101
--> Waiting for carrier.
ATDT908274101
CONNECT 50666/ARQ/V90/LAPM/V42BIS
--> Carrier detected. Waiting for prompt.
~[7f]}#@!}!}!} }=}!}$}%\}"}&} }*} } }#}%B#}%}%}&B}-[7f]}$}'}"}(}"t$~
--> PPP negotiation detected.
--> Starting pppd at Tue May 20 01:17:12 2003
--> pid of pppd: 364
--> Disconnecting at Tue May 20 01:17:12 2003
--> The PPP daemon has died: A modem hung up the phone (exit code = 16)
--> man pppd explains pppd error codes in more detail.

I've spent hours reading man pages & cannot make sense of this.
I've double-checked the authentication, used a w2k box to successfully connect using the same username & p/w

Thanks in advance