The terms DTE and DCE are very common in the datacommunications market. DTE is short for Data Terminal Equipment and DCE stands for Data Communications Equipment. As the full DTE name indicates this is a piece of device that ends a communication line, whereas the DCE provides a path for communication.
Let's say we have a computer on which wants to communicate with the Internet through a modem and a dial-up connection. To get to the Internet you tell your modem to dial the number of your provider. After your modems has dialed the number, the modem of the provider will answer your call and your will hear a lot of noise. Then it becomes quiet and you see your login prompt or your dialing program tells you the connection is established.
Now you have a connection with the server from your provider and you can wander the Internet.
In this example you PC is a Data Terminal (DTE). The two modems (yours and that one of your provider) are DCEs, they make the communication between you and your provider possible. But now we have to look at the server of your provider. Is that a DTE or DCE?
The answer is a DTE. It ends the communication line between you and the server. Although it gives you the possibility to surf around the glode. The reason why it is a DTE is that when you want to go from your provides server to another place it uses another interface. So DTE and DCE are interface dependend. It is e.g. possible that for your connection to the server, the server is a DTE, but that that same server is a DCE for the equipment that it is attached to on the rest of the Net.
In Data Communications, timing/synchronization is a "MUST" consideration during transmission.
Equipments which are connected with serial must have a reference clocking to synchronize each other.
DTE communicates with DCE in reference to the clocking provided by the DCE, thus we usually set the clocking from the DCE.
In any serial circuit (variable clocking) there's always got to be a master/slave relationship. In a standard circuit from your telco, they are the master and you are the slave (therefore typically don't think about it)
In a point-to-point circuit, there's actually two options... The first is that the telco essentially delivers a pair of copper wires end to end, and therefore one of your sides must provide the clocking.
The second is that the telco provides the clocking "transparently" provide clocking to both sides.
The speed at which a serial WAN link runs is determined by the 'clock rate', this rate governs the number of bits that can be transferred per second, for example, a clock rate of 64000 would give an overall serial link bandwidth of 64k. This clock rate can not be set at the DTE's (routers) at either end but is controlled by the telco ISP via the DCE's.
If you require more bandwidth you must contact your ISP and request the clock rate to be increased and pay more money for the privilege! There is NOTHING you can add to the Cisco router configuration to increase the bandwidth above the clock rate!
There are different types of cables used when setting up a serial WAN link. As discussed previously, the DTE (router) can only talk to a DCE, a cable called a DTE/DCE cable should be used for such a link. There are a variety of different flavor of plug that can be used at each end of a serial DTE/DCE cable but they all conform to the same standard which governs the Physical (OSI Layer 1) details, electrical signaling, voltages etc.
When studying for a CCNA you are hardly wanting to pay for a leased line from your ISP, or purchase expensive DSU/CSU's. You can connect two routers using a DTE serial cable and a DCE serial cable connected back-to-back. One additional configuration command must be entered onto one of the routers serial interfaces to enable it it to provide a clock-rate for the link, simulating a DCE.